Gain From Losses

[swsop]

When you buy stocks, you should set a "stop-loss" point.
If you by a stock for $80 a share, for example, be
prepared to sell that stock if the price drops below $70.
Advantages:

* The losses you take can offset taxable gains, holding
down your tax bill.

* Net capital losses up to $3,000 can be deducted against
ordinary income each year.

* Losses in excess of $3,000 a year can be carried forward
to future years. These loss carry-forwards can offset the
tax you'll owe on any capital gains you take.

Although some investors take stock market losses near
year-end, this strategy may force you to sell when other
investors are selling so you'll wind up with even lower
prices. Instead, you should take capital losses throughout
the year, if your stocks lose value.

Besides the tax advantages, taking losses sooner rather
than later can help you to limit those losses before they
become larger.

SWSOP:cheesy:

 

[Birchtree]

I had the unfortunate pleasure of selling out two stock positions a few weeks back - and because of previously established tax-loss carry forwards will not pay any tax on the profits. It's never pleasant to absorb a loss but it can be used as a strategy to offset gains that one may take into the future. I ended up buying 18 other companies and have lost money on each purchase, but that is par for the course. If you think long term like I do there is no harm done - I may repeat the same strategy again shortly - have more profit to take if necessary - I simply adore wall flowers.

Dennis