"I'm not selling my losing stock until I get back to even." You've heard people say this right? But is that a way to determine what to own? Your cost basis has nothing to do with what's an appropriate investment for you or whether a position has value. Does the stock seem cheap or expensive at its current level? If may have fallen because of bad news or bad earnings and may not be cheap even at the lower level. But the tax loss does have value (if not in a retirement account.) So take the loss and invest in what's right for you. Still love your oil holding but want the loss? Sell it and buy a similar oil stock to take the loss and still have your desired exposure. (But don't sell and rebuy the same stock or the loss won't count). Remember, where you bought an investment might have little to do with what it's worth today so look forward not backward when deciding what to own.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com
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