Sell when you can, not when you have to

July has been an interesting month for the Aspect Large Value portfolio. I didn���t add any new positions and sold 40% of my Intel (INTC) holding for a gain.

One reason I sold Intel was that the position had become too big of a percentage of the portfolio. At the same time, I wanted to lock in some profits. It���s not that I think Intel is topping out ��� quite the opposite actually. It���s just that whether this is a strong bull market or a bubble, I like to sell when I can, not when I have to.

I have owned shares of Intel off and on since 1991, when I was in high school. I traded in and out of it back then, and by 1995, I finally decided to take down a bunch of it and sit on it. So I can honestly say that I have ridden this stock all over the place.

The first 10 years were great; the last 10 years have been painful. However, with a cost basis of 13 on my original shares, and having trimmed some back in 1999, I feel pretty good about Intel as a company and as an investment.

Capital gains taxes are only a problem to those who make money. So as much as I try to lower my tax bill by taking longer term positions, I don���t let taxes dictate whether to buy and sell a stock.

Of course, I don���t have a crystal ball. Yet if I had to guess, Intel may be a run that should continue for at least another 12-18 months.

Some have speculated that Intel is working on memory chips while other point to Intel���s ambitions for expanding into the chip market for smartphones and tablets.

For me, it is hard to tell ��� but Intel seems to have the best designs and the best manufacturing processes, so whether it applies it to tablets or memory chips, the company should be able to get a good number of design wins.

If Intel can make use of the capacity the company has already built, the stock could rise to the high 40���s or possibly the low 50s in my opinion. At that point, I hope to be mostly out of the position. In the long run, the areas that many large cap tech stocks compete in are turning into commodity areas, and I believe that there will be more exciting places to invest capital at that point.

For the record, I do not believe the stock market is in a bubble. Considering how low interest rates are, the market is actually cheap on a relative basis. On an absolute basis, it is hard to find stocks to buy, and I am selling more than I am buying anyway these days.

As a business owner, I look at what I would pay for a business or what I would sell it for ��� this does not change how much if the market goes up or down. So right now, I believe that we are in something like a sellers market.

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