I'd like to provide my take on this.
Since the market melt down, certain stocks which were heavily invested in the IRA dividend account have fallen dramatically. So taking tax losses and not continuing to collect dividends on this I'm simply not able to do. I take the dividends in cash and will not reinvest in these companies. Part of the problem was that those companies were being reinvested in to begin with and that cost averaging hurt me the most as the stocks plummeted and have not recovered.
Now, I was able to save much equity in quite a few stocks by cashing out but I couldn't save those that fell so precipitously. That said I've been slowly trimming from this account and will continue. The stocks I have been trimming are for all intents and purposes "hopeless'. That's to say I do not see an up side to them for years to come. So, I've given up on "breaking even", but I've charted a realistic negative return on each one of these and also put stop losses on them all. They go down past a point, they're out. Thery go up to a point and they're gone.
Primarily oil and REIT stocks have held the account down to the tune of 11% negative this year in spite of my best efforts to trade around the slugs. Last year, this same portfolio had a 5.5% dividend and interest return, and was equity positive all around. Today, due to dividend cuts alone, I won't see anywhere near that 5.5%.
In fact, I'm clearly going to sell some of these losers with the intention of reinvesting in higher returns. But, I must emphasize, I believe I do not have to do this. That eventually the majority of these stocks WILL turn around and that there's no guarantee that a substitute- replacement stock will do any better. Hence my Lone Ranger approach to investing- Go in have a goal to get 5- 10% and get out. Do this as many times as needed, couple with the dividend cash and buy more till I've attained my return goal. Then sell everything- whatever's left.
AI
