Key insights
- An investor is weighing whether to sell ASML shares after a 40% gain, considering the high valuation and potential for a correction against the capital gains tax implications. The investor is seeking a mental model to decide whether to sell the entire position or hold, reflecting concerns about limited future upside and potential downside risk.
How do people think about investments that may be fully valued. I'm a firm believer in ASML but the price now is quite high. That's good for me because I have a 40% gain. However if I sell I instantly lose 10% of my holding for capital gains taxes (.25 * .40 = 0.1 ).
Alternatively I can keep it invested (along with that 10%) and let it ride but I'm not convinced that there's much upside anymore and that the odds of a 10% correction that endures for a year or more are material.
Anybody have a good mental model here? ASML is 10% of my portfolio and I'd rather sell or hold (selling half doesn't really seem like a move with conviction).