Year-End Tax-Selling Buying Opportunities

I was about to sell my dreadful little shares in ETRM for a tax loss* — they were down from 90 cents where I had suggested them to you, to 11 cents — when it occurred to me that everyone else was doing the same thing, to nail down their tax losses, which was one reason, perhaps, the shares were so cheap.

So I bought a bunch instead.  No tax loss for me from ETRM this year; but Guru says, “Well, the company has a real product and they ‘should’ be able to sell the company for something like a triple from here.”  That’s still a far cry from where he first liked it.  And the quotation marks around “should” are not to be taken lightly.  But a triple is a triple, whether it’s from 90 cents to $2.70 or 11 cents to 33.  So we’ll see.  Only with money we can truly afford to lose — as evidenced by the severe paper losses already suffered on this stock.  (Unless you were smarter than me and sold when it hit $2.24 less than a year after I suggested it.)

The larger point is that this a good week to take a look at losers in your portfolio and possibly “harvest” losses to lower your 2015 tax bill . . .

. . . yet also an interesting time to look for bargains that tax-selling may have created.

Or sell some of the former to switch into some of the latter.

It’s no sure way to make money — stocks beaten down by tax selling can get further beaten down by whatever ailed them in the first place; and then disappear altogether.  (From what I read on the chat boards, about the only truly impressive thing ETRM management does well is: overpay themselves.)  Indeed, “disappear altogether” seems to be exactly what will happen to our SIGA shares in the wake of last week’s long-awaited Delaware Supreme Court ruling.  To think that we could have sold at $14 for a quick double years ago is almost enough to make me crazy.  It is at times like these I have to remind myself, as I used to remind Charles: We have hot water.  As much as we want!  Any time we want it!!   What a time to be alive.  And still:  What a disaster.  “I’m so sorry for your loss!” takes on a whole new meaning in this context.  But I am.

All that said, would this be a time to buy a little GLDD?  A little PRMRF?  A little BOREF?  Each under $5?  Check back with me in a year or two and we’ll know.

*Capital losses cancel out capital gains; and to the extent they exceed gains cancel up to $3,000 a year in ordinary income, with any further excess carried over to future years. But beware the “wash sale” rule: if you bought the same shares within 30 days — before or after — you sold them for a loss, the loss is deferred until you sell the newer shares.  (By contrast, there is no wash sale rule on gains.  Sell at a profit, buy back even moments later: the gain is fully taxable.)