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.)
Quote of the Day
As they say in poker, 'If you've been in the game 30 minutes and you don't know who the patsy is, you're the patsy.'~Warren Buffett
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