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Microcap & Penny Stocks : CECN

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To: Y-fall who wrote (1003)	11/10/1998 10:05:00 PM
From: Joe Bilich	Read Replies (1) of 1030

not exactly--you don't pay $2000 less in taxes, you get to reduce your taxable income by $2000. This means you reduce your taxes by $2000 times your tax rate. If your tax rate is 30% you would pay $600 less in taxes than you would without the net loss. I agree with the previous poster--unless you have some overriding reason to believe a particular stock will bounce back, you should sell your losers. There are always fresher stories and year-end is a good time for bargain hunting. Think of it another way. Let's say you had no gains, and were considering whether to sell a stock on which you had a $2000 loss. That tax loss is worth $600 (in the above example) to you. What are the chances of your stock appreciating by $600? You need to plug in how many shares and today's price in the following--say you had 2000 shares and today's price were $1, the stock would need to appreciate to $1.30 to give you a value equivalent to the tax loss. What are the chance of getting a 30% rise in price before next April? If you are not confident you will get that much by holding, the choice is easy!

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