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Strategies & Market Trends : Value Investing

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To: Suma who wrote (24316)	7/12/2006 11:06:53 PM
From: E_K_S	of 78704

Hi Suma - I am in a similar situation with PFE as I own shares in both my IRA and taxable accounts. Both are held w/ a small net loss but I am not worried since PFE throws off a good dividend while I wait for management to add new drugs to their franchise. If you do not need the funds, PFE represents less than 5% of your portfolio and it resides in your taxable account, you could do a tax loss sale for your 200 shares w/ a cost basis of $36, wait 31 days and buy these shares back at the current price. You would lower you net cost basis and still maintain the same ownership interest. You could then use the booked loss to off set against other 2006 equity gains of other 2006 portfolio income. In the past (over ten years) large Pharma stocks demanded a 30 PE. PFE and many of these drug companies have not been this cheap and now trade at PE's between 12-15. finance.yahoo.com Every diversified portfolio should have a core position of drug companies. PFE ranks as one of my top five holdings in my IRA and ranks as one of my top 15 holdings in my taxable account. I repositioned my investment in drug companies last year adding new names and upping my core positions. I have several different cost basis in my taxable account but in the IRA it does not matter. The dividend income generated by PFE in the IRA is used to buy stocks in other sectors. I plan to do no new selling (or tax loss selling) on my current PFE positions but as opportunities arise, I have a list of new drug companies I want to add. It's just a question if a value opportunity presents itself. PFE is the cheapest of the group I watch and I consider it an excellent value buy at current prices. Finally, tax loss selling can be tricky as most investors wait until the 4th quarter to net out their losses. That is why we typically see an October and November sell off and then end of year rally. So if you are going to do the sell and buy back after 31 days, I would suggest setting up the strategy during the summer rally. That's what I have been doing and it has worked out well so far. EKS FWIW - I am a long term holder of stocks and have positions that I have owned more than 10 years. Some investors like to micro manage their accounts and are not patient enough to hold over a business or economic cycle. Every time you make a trade, you have a 50% chance of being wrong. I have been wrong many times and there is no one correct answer to your question...only different strategies to consider.

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