I’ve decided to trim my positions in Intel (INTC) and Cisco (CSCO) in the Aspect Large Cap Value portfolio.
The market seems to be exhibiting a bit too much holiday cheer for my tastes. I am not doing anything with the sales proceeds right now other than building a cash position.
The reason for the selling is that the dividend yields on both stocks have dropped well below 3%.
With very little organic growth in Cisco, I did not see much upside other than a change in leadership which could send the stock up another 10-20%.
As far as Intel goes, in my opinion the stock is still a good bet, but I have a strong value bias and the stock’s price to earnings ratio is now almost twice its growth rate.
If Intel executes on its mobile strategy and we continue to see a nice replacement cycle, Intel could run into the low 50s in the next 18 months. The portfolio still has some exposure to Intel.
In addition, even with the latest dividend increase, Intel’s dividend yield has become somewhat average, especially when compared to the 4%+ we were receiving when we bought the shares.
It seems like the Nasdaq could very easily eclipse its all-time high of 5008, but I am building a war chest right now in case of another pullback.
In my opinion, the stock market could finish the year strong. However, I feel more comfortable building up my cash position for trading opportunities ahead.
DISCLAIMER: The investments discussed are held in client accounts as of October 31, 2014. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.