Hi Paul -
Re: Portfolio Management -
I noticed you sold a few shares of MHR with a recent purchase made on 6/8/2010. Do you match your sells with your different Buy lots, use a default method like FIFO and/or LIFO or use a mixture of tax lot accounting for your trades.
I have always matched my trades to my different Buy/Sell lots. Schwab now requires all trades made after 12/31/2010 be matched for IRS reporting. If their default tag is different than what I want, I must call them w/i three days of my trade to tag the trade appropriately.
In my E&P basket, I have quite a few Buys at higher prices and once I begin to sell a position, I will need to be aware of the Wash rule. I try to apply the most efficient tax lot accounting method for my particular transaction.
My tendency is to hold onto my lowest priced shares (at least 1 year and 1 day) and peel off my higher cost shares booking losses accordingly. However, in order to book a loss, one must also be aware of the Wash rule.
"...A wash sale occurs when you sell or trade stock or securities at a loss, and within 30 days before or after the sale you:
* Buy substantially identical stock or securities
* Acquire substantially identical stock or securities in a fully taxable trade, or
* Acquire a contract or option to buy substantially identical stock or securities which...".
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I am finding that the "Art Of Selling" is as important as buying. Peeling off shares, lowering the position cost basis, booking a gain (ST vs LT), reloading the cash account, minimizing tax liabilities are all important considerations when selling. It's a never an all of none decision for me as I always scale into and out of a position.
My largest challenge is monitoring those companies that I want to own but sold based on current valuation. I maintain a watch list (by sector) of companies that could be Buys but at lower prices. Sometimes it takes as long as a year for them to come back to my value price range.
If you have run across one or more strategies that have worked for you, please advise. I have around 85 positions that I actively follow and manage with about another 150 on different sector watch lists. I am always adding new candidates and at times must delete old candidates or I become overwhelmed with all the possible opportunities.
My best gains have come from extended market declines where I have had ample cash resources to build my inventory of companies. With the Market up over 5% in the last week, it feels like I need to book some gains and build up my cash reserves again.
EKS |
