It's Tough, but Stick With Quality
We've got the Replacements out there right now!
That's right, we are now picking stocks to replace perfectly good ones that we sold because we thought they were done rising, or because we feared that they would be vulnerable to the FBFH -- the Fed Bolt From Hell -- which is the new term I am inaugurating to describe the moment when central-bank chief Ben Bernanke goes from bond-buyer to bond-seller.
The FBFH is so widely anticipated that, this morning, I heard someone predict it would transpire by Memorial Day -- that you know the best stocks are being sold lest they be struck by Bernanke lightning.
This article originally appeared on March, 15, 2013 on RealMoney. To read more content like this + see inside Jim Cramer's $3 Million portfolio for FREE Click Here NOW.
For example, we trimmed some retailers from the Action Alerts PLUS portfolio in part because of the anticipated FBFH. But now what are you supposed to do? Are you supposed to replace Costco
Do you replace, say, Cummins
You sold Accenture
You sell a high-quality semiconductor-equipment company, but tech has lagged and now it is coming on strong. It is time to buy some Applied Materials
The replacement factor is figuring huge here, because without a pullback, the cash is just killing managers. If you take your cash position up, say, to 10%, the stocks you do own have to do an awful lot of heavy lifting in order to stay pace with the S&P 500. Forget beating it; that's almost impossible.