Well...the market tumbled yesterday and today it continues to drop down further.
Maybe it is the beginning of significant correction or maybe not. The point is have you pruned those less than stellar performers from your portfolio? Now I am not talking about how they have moved in the market, but how they have moved fundamentally.
Some of the questions I would be asking about positions I own would be.:
- How did the company perform fundamentally in the last downturn?
- Is management reducing their financial leverage to reasonable levels given their business and industry?
- Are they investing in their business with capex that is larger than their depreciation? You don't want it to be too low nor too high.
- How is their cash from operations? Are they being smart in how they building their cash resources? Look at the CF statement. - Are they buying back shares at excessive prices? There is a time to buy and a time not to buy your shares.
- Are they making the correct management moves to fortify their market position? I can cost in the short run, but in the long run it may be the best move.
Be safe and watch your backside. You don't want to be without your swim trunks "when the tide goes out"!
