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Re: Toofuzzy post# 40609

Friday, 04/22/2016 12:48:46 PM

Friday, April 22, 2016 12:48:46 PM

Post# of 47030
Hi Toofuzzy, Sorry about not being clear enough. The problem is two fold, first is the exchange of current income for declining value of the position, the second that the amount in some of these positions is too big compared to the total value, both current value and purchase cost, of the trusts. This came about because partly because of needing to place largish chunks of money all at once. One example is a non-traded REIT that paid a bit over 8%, and then it became a traded stock and it almost immediately took about a 10% drop in price as well as some strange restatement of the basis from $10/"share" purchase price to about $9.85/share after being listed.

Given that the position was too big for the portfolio, the goal is to not loose a bundle that would take years to recover - my mother panicked during the 2008 downturn and sold a bond fund for about a 40% loss that is she had merely sat tight it would have fully recovered by the middle of 2009 and been up somewhere around 15% compared purchase. My goal is to avoid that problem.

As to your suggestion of how to handle this, I'm not sure I understand your way of doing this:

If you know the original cost basis you can sell the security you don't want, buy another security, set PC to the original amount invested which will have you buy more of the new security when you first purchase it (if it dropped enough and is Aim directed)

On three of the over large positions there are reasonable dividends - 5.9% to 6.3% so I don't want to sell all of these, just reduce the size to a more reasonable amount relative to the total portfolio.

The other issue is that if I dispose of large amounts of these three I'll loose the tax loss when one of the trusts is closed, which will happen later this year as my daughter's share was a specific amount and the rest is mine. Merging those positions with my personal ones would make it easier to manage.

It would not matter as much for the other trust as it will continue until my brother dies, which is not likely before the tax loss is used up given the the trust's current yearly income.

Best,

Allen

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