The rally hassee last week's column. Not only did I get another opportunity, as I predicted, but by the time I actually sold, the Nasdaq was above 1600, giving me an added bonus.

Even with this week's pullback, which I consider healthy, the Nasdaq was still above 1585 on Monday, and it may not be too late to do some selling if you've procrastinated even more than I did. Note that I am being careful to avoid the phrase "take some profits." As I've just experienced, with the averages as depressed as they've been in this bear market, selling after a 25% rally can also mean realizing some losses.

So what did I sell?

or in some cases, wrote call options, as I recommended that had gained the most since the market low of March 9. These are NOT necessarily the stocks I owned with the largest unrealized gains. Whether I was selling at a profit or loss is irrelevant. To the extent I realized losses, they'll come in handy next year at tax time.

I find that many investors are reluctant to realize losses unless it's December, when they're looking for losses to offset their gains. But just because a stock was high at some time in the past, perhaps when you bought it, doesn't mean it's headed straight back up. It may never get there again. Barring extraordinary circumstances, all I look at in deciding what to sell is a stock's performance in the most recent rally.

This time everything I sold turned out to be financial stocks. Since it was the March announcements by Citigroup and Bank of America that they were profitable for the first two months of the year that kicked off the rally, this shouldn't be too surprising. In the past month, financial services as a group gained 46%, far ahead of any other sector. Computer hardware was next (up 30%) followed by industrial materials (up 29%).

As I've reported, I've been gradually adding to my financial stocks, having owned none when the recession began. Among those that I owned, Goldman Sachs (GS) was up 54% when I sold; Wells Fargo (WFC) was also up 54% and Bank of America (BAC) was up 93%. Those are pretty great returns, though not the best Barclays (BCS) gained 191% and Citigroup (C) 161%. Still, to put this in perspective, all of these stocks have declined from a year ago. Bank of America is down 80% and Citigroup down 88%. These stark contrasts illustrate the extremely unusual nature of the current financial crisis, in which uncertainty has been rampant and financial stocks have borne the brunt of it.

As I said, the fact that these shares still show steep one-year declines is irrelevant to me. Even if they recoup all those losses, they're likely to have periods of weakness, and I'll have opportunities to buy them again at cheaper prices. I doubt that we've experienced the last shock to financial stocks. Those secretive "stress tests" are still going on. And in any event, a gain is a gain; I buy on weakness, sell on strength.

Last week I recommended a strategy of selling covered calls to raise cash. But the premiums for calls on these financial stocks were surprisingly low, given the level of volatility in the market. (The premium is what the option writer is paid to bear the risk that the stock will rise above the strike price. A high premium shows investor optimism that the call, and hence the underlying stock, will rise in value.) Wells Fargo and Bank of America call premiums were extremely low, so rather than write the calls, I just sold the stock. Goldman premiums were more attractive, so I sold July and October calls, both at a strike price of $125.

In the case of Bank of America, I more than doubled my money. But Wells Fargo I sold at a loss. If I do have to deliver Goldman shares in July or October at $125, I will realize gains.

None of this means the bull market is over; by many measures it's still in its infancy. At its high last week of 1622, the Nasdaq Composite was at a level also seen back on Nov. 7, which means most of my recent purchases are solidly in the black. Now I have some additional cash to deploy when the inevitable correction arrives.