Hi Gang, As you may remember when I took over the trusts my mother had traded current income for decreasing position value. That's not quite accurate but it works for this discussion.
So, not wanting to lock in significant losses I've mostly been sitting on things waiting for a bit of a turn around, doing a bit of tax loss harvesting to reduce taxes and increase cash positions.
I've struggled to try to move things into AIM positions and I think I finally have found a way. For discussion purposes let us say that 8000 shares were bought at $10/share, but it is now trading in the $8.00-$8.50 range, i.e., 15-20% loss.
What I did was go to an arbitrary point in the past, 1/1/15, and took the price at that point, end of December 2014, as a starting point, let's say $8.15, and multiplied the 8000 shares by it to get $65,200 as stock value. Then I multiplied it by 1.25 to get $81,500. Subtract $65,200 from it to get $16,300. I ignored the actual cost per share.
Then I entered the $81,500 as the Initial Investment - Dollar$, with the Initial Investment - Percent Cash % as 20% or $16,300. I set buy and sell safe at 10% with the minimum $1500 transaction amount and a minimum share number of 150.
From there I poured the prices as recorded by Yahoo into the spread sheet and looked at the resultant trades. What I found is that almost all of the loss of ~$18,000 that had existed had been recouped just using the volatility of the market. Mind you this did not include transaction costs, about $750 and the taxes on the earnings. But the beauty of this is that almost no taxes would be owed as I used the "Highest Cost" for the sale price gain calculation. So if I sold at $8.00 I lost $2.00/share for tax purposes. When I bought it would be at a lower price but I held those in reserve. This way I managed to accumulate about $8000 in tax losses in addition to increasing my cash.
Of course this is just back testing, but I tried a couple of different positions and got similar results. Much much better than holding out for the market to recover.
We'll see how reality pans out.
Best,
Allen
Best
