As the large caps approach fair value, I start looking for things to sell so I can reinvest in Municipal Bonds.

I purchased Yum Brands (YUM – $68.25), owners of KFC, Pizza Hut and Taco Bell, back at the end of October 2006 as part of a basket that would benefit from Asian Growth and a decline in the dollar.  I buy the small positions because I have a philosophy that forces me to reevaluate all small positions for liquidation or an increase.  I couldn't come up with a reason to buy YUM so I must sell.

I sold YUM today for three reasons.

1. P/E ratio was not compelling:  At nearly 23 time trailing and 21 times 2007 earnings, the stock seems priced about right for its growth.

2. I have dollar decline plays that I like better: Stock recent rally is because of a split, the general market and a decline in the dollar.  I already own several stocks (GE , PG, JNJ) that benefit from a dollar decline.

3. KFC (the old Kentucky Fried Chicken) just scares me:  I don't even think the animal that they used for the meat could legally be called chicken.  I sleep betting knowing that I'm not hoping more of those creatures be eaten by humans.  Perhaps KFC is America's best weapon against global domination by the Chinese (in the interest of fairness here's a link to the YUM Brands Human Animal Policy).

4. Small position discipline:  Something I used to tell my traders is when it comes to small positions, either double them or get out.  It's time to follow my own logic.

Disclosures and confessions: I sold YUM today at $68.38.  I bought those shares the last week of October 2006 at $58.00.  I may buy YUM again if the price fell below $60, but I expect the growth will continue.  I like this stock at a p/e below 20 times same year earnings. 
KFC (YUK): I don't eat Chicken or KFC, I haven't since I was five except by accident or when tricked.
Taco Bell (YUM): I do like Taco Bell.  Those bean and cheese burritos are yummy. I'm sort of scared of their beef, though.
Pizza Hut (HMM): I will eat at Pizza Hut at road stops or balls games, but I think the little mini pizzas are too greasy.