A big change to my portfolio: I closed two core position

1 - Introduction

My portfolio recently hit a new all-time high and is now up 388% over the last three years and 60% year-to-date. Back in June and July, I was buying heavily into what I thought were oversold stocks.

Many of these buys have done great so far, but after the recent strength in semiconductor and software stocks (the core of my portfolio), it's time to shift my focus to capital preservation.

What this means in practice is that I've started to trim several positions, but more importantly, I closed two core positions, one of which I'd held for nearly five years, or 1,767 days to be precise.

I gave it a lot of thought before pulling the trigger, and in this portfolio update I'll share which positions I closed and why.

2 - My though process

Before I dive into the details, let me walk you through my thinking. If you've read my monthly portfolio updates, you'll know I've been very happy with my current portfolio except for one thing: the number of positions I held.

This has been on my mind for a while. Ideally I hold 10 to 12 positions, but at one point I had 15 (including cash), which is well above my threshold.

Why I hold no more than 12 positions:

• It forces me to think carefully about what I add. If I'm at my threshold, one position has to go before another comes in, though I haven't really held myself to that rule lately, so it was time to start again
• Tracking 10 to 12 businesses is much easier than 20+, so I can stay on top of everything without missing potentially thesis-changing developments
• I want my portfolio to concentrate over time as winners survive and laggards get cut loose, so I review the performance of my positions carefully when deciding what to hold and what to sell
• I don't want to go below 10, because my thesis could always turn out to be wrong, or a company-specific black swan could hit a business in ways I can't foresee. Maintaining at least 10 positions still gives me some level of diversification

Alright, with that being said, let's dive into the full update, where I explain:

✓ Which two positions I sold
✓ What changed in each investment thesis
✓ The returns since my original purchases
✓ Why I sold now rather than earlier
✓ Where I plan to allocate the capital

Let's dive in.

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