Hi Tony,I totally understand your concern and desire to lock in some gains with Amazon. And if it makes you more comfortable to do so, I won't try and talk you out of it. But here's what I'm thinking when it comes to Amazon …Amazon's valuation does appear stretched when looking at traditional metrics such as trailing P/E and even forward P/E multiples, but it almost always does. It looked expensive when I recommended Amazon to Tier 1 investors back in December, and Amazon has risen about 30% since then. But Amazon also looked expensive when David Gardner recommended it to Stock Advisor members back in 2002, when the stock was trading for 75X the next year's earnings:http://www.fool.com/investing/general/2012/07/10/investing-l...That was 1,500% ago.And I remember that Amazon's stock even looked expensive at the depths of the financial crisis of 2008-2009, when the stock was trading at around $37 per share.My point is that I've personally never seen a time when Amazon doesn't look expensive, and yet, it's been one the best stocks to own over the last decade.And I do believe that Amazon's true earnings power and cash flows are being suppressed by the growth expenses and expenditures the company is incurring as it continues to build out its infrastructure. And therein lies our opportunity; I seek out companies and leaders that are unafraid to sacrifice short term earnings as they invest in the future of their business. Amazon and Jeff Bezos have demonstrated the courage to do this time and time again, as well as the ability to earn solid returns on their investments. So while I can't tell you when Amazon will scale back its spending, I do believe that when it does, its earnings and cash flow will explode, and today's stock price will appear much less expensive in hindsight.And while you're right in that any significantly negative macro/micro news could take Amazon down hard in the short term, my vision for the Tier 1 portfolio is to acquire long-term ownership stakes in the world's most elite businesses. This type of investing requires a commitment to hold our businesses through the inevitable short-term volatility that will arise.The reason for that is while I do believe it is possible to identify good times to sell a stock, it is often extremely difficult to get back in. For instance, let's say you sell Amazon now at approximately $250 per share, with the idea of buying back in if it falls back to $200. And maybe Amazon does sell off, but shares only go to $210 before surging higher. If the stock is trading over $300 in the next few years, will you be happy that you sold at $250? How about if the stock is trading over $500 in five years time? Would it still have been a good decision to sell? My point is not that I expect Amazon will reach these levels, only that even if we're right to sell in the short term, we can often turn out to be wrong to have sold in the long term.Having said that, I am not promoting a buy-and-forget form of investing. To the contrary, because Tier 1 is a very concentrated portfolio, I watch our businesses closely for any sign of deterioration in their competitive advantages, growth potential, etc. And in that regard, I see no signs of Amazon losing its competitive edge. In fact, more and more of its competitors – such as BBY, HGG, RSH – are losing ground to Amazon seemingly every day. And Amazon continues to disrupt important, emerging markets such as with its Amazon Web Services business, giving me confidence in its long-term growth potential. So I see no reason to sell Amazon based on fundamental reasons, and our investment thesis appears very much on track.So Tony, I don't plan on selling Amazon in the Tier 1 portfolio due to valuation concerns, and, in fact, should Amazon experience a significant pullback, I'd probably use the opportunity to add to our position.Fool on!Joe T
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