Are you overweight in these stocks?


With the exception of a slight market correction over the last couple of weeks, the stock market has performed incredibly over recent years. The Dow Jones and the S&P 500 hit new record highs as recently as last month, and while the NASDAQ is still below its pre-dot-com bubble levels, it too has marched steadily higher since the start of 2009.

As is the case anytime the market is strong, there have been some stocks which have really set themselves apart from the pack. In some instances, these stocks have so greatly outperformed the broader market that their weighting may have become a problem for your portfolio.

Typically speaking, whenever you establish a position in a stock, you try to give it a fair weighting in your portfolio. You were comfortable investing 2% of your portfolio in the stock, but unless you have been consistently reducing your exposure to your strongest choices, chances are high that these positions may have grown to a much larger share of your portfolio.

Where the problem occurs is that we never want to sell our winning stocks. That is human nature. I would never suggest that just sell your top performing stocks, so you can relax, because that is not the point of this article. None of the stocks we discuss are going to be stocks that I believe are sells in today's market. However, I do believe that you should be aware of the danger you run should you allow yourself to become too heavily weighted in any one particular stock.

As we have seen in recent weeks, the market is capable of correcting, and when they do, often times it is the stocks that have greatly outperformed the market during the bull run that get hit first.

Each of the following stocks has enjoyed a strong run, and investors would be wise to bank of those profits and rebalance.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , insurance , Technology

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