NEW YORK (TheStreet) -- Last week, Jim Cramer and Stephanie Link, co-managers of the Action Alerts PLUS portfolio, decided to exit their position in Morgan Stanley (MS) and adopt a more cautious outlook on the financial sector as a whole.
In a recent video interview, Link stated, "I just don't like the way the yield curve is acting in the near-term, even if it is temporary." Add in Morgan Stanley's high beta, and it all but made sense to sell the name in order to reduce sector exposure.
However, short-term weakness and consolidation can work in investors' favor if they believe in the longer-term picture. And that breather is exactly what they're looking for after the sector put up big returns in 2013.
According to Link and Cramer, they plan on using their gains in Morgan Stanley to add to specific companies on a pullback. These buy-on-weakness stocks include: Bank of America (BAC), J.P. Morgan (JPM), KeyCorp (KEY), U.S. Bancorp (USB) and Hartford Financial (HIG).
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DISCLOSURE: At the time of publication, Cramer's Action Alerts PLUS portfolio had a long position in BAC, JPM, KEY, USB and HIG.
-- Written by Bret Kenwell in Petoskey, Mich.