There is probably a better thread to discuss tax implications - so here just a couple of points in response:
Capital gains in NZ are taxable if the shares have been bought with the intention of trading (i.e. you intended to create an income through buying and selling at a better price). If you buy to enjoy the dividends but sell at some stage into a downtrend to preserve your capital, than any capital gains made that way are according to my understanding not taxable.
But even if you can't convince your friendly tax man by doing this too frequently (and I think this needs to be an individual discussion looking into the particular individuals "trading habits" to decide whether they are trading or investing), wouldn't it be better to make a profit and pay taxes on it than to make no profit and save paying the taxes?
If you are not sure - what really is the risk? Say you make $10k by selling at the start of a downtrend and buying the same amount of shares cheaper back at the bottom. If IRD deems in this particular situation that your intention was to trade (vs capital conservation), the worst which could happen is that you give (worst case) 3k of these 10k to IRD. Leaves you still 7k better off compared to holding throughout the downtrend.
I don't see a relationship to the size of the portfolio either. Even if you are considered a trader by IRD, than you only pay tax on realized gains, not on any paper gains your portfolio might enjoy (no matter how large it is). And the divvies you pay taxes on anyway) no matter whether deemed to be an investor or trader), though given that HBL divvies are fully imputed is this not a hard thing to do ;):