Tuesday, December 16, 2008 1:30:47 AM
With ALL extra averaging-down Cash provided by the
IRS + you're hometown State Governor ; And , All Tax-Free.
Here's the humorously basic + Factual math ,
that even Any Tax-Lawyer could explain to Any pinky long
who is [on average] losing 90+% , every year.
Let's use wnbd as a typical pinky unvestment example.
The AVERAGE 'dollar-cost-averaging' wnbd long paid ~$0.03
per share for wnbd , since January , 2008. [Many even paid
as much as $0.05 per wnbd share.] Please notice that the
'average-daily-volume' [ADV] was ~30 Million shares per day
in February 2008 [while the price was 6-10 times higher than
today] ; but , since then , the ADV is less than 5 Million.
So, the average wnbd long is sitting on a pile of wnbd shares
that cost him ~6-10 Times Today's Closing Price. Let's just
use 8x for our humorous math fun.
Thus; if the wnbd long unvested $8,000 in February , he could
sell them for $1,000 This Year ; and claim a $7,000 Tax-Loss
for 2008. If he does [within 2 weeks] , the IRS will pay him
AT LEAST 15% , TAX-FREE , OF HIS $7,000 LOSS [= $1,050+] ;
AND his State Governor will Also Pay Him Another 5-9+%
[= at least $350-$630] , also Tax-Free.
So, he will have $1000 from selling the ~90% depressed wnbd's,
Plus $1050+ from the IRS , Plus ~$500+ from his Governor.
That's a total of AT LEAST ~$2550+ , AND MUCH MORE IF HE IS
IN HIGHER TAX-BRACKETS [which is not likely, for pink fans].
Anyway ; with the $2,550+ , he could buy-back 2.55+ Times
as many wnbd's [after 31 days, to avoid the 'wash sale'] ;
And , if wnbd falls just another 15% from the Tax-Sale Rush,
the $2,550 will buy $3,000 'worth' of replacement wnbd's ;
because ; $2,550 / 0.85 = $3000 [EXACTLY].
extra , Sincerely .
P.S. ; None of the above applies to wnbd shorters , because
they have no losses. In fact, the taxes on their gains will
be used to pay the refunds to the clever longs who decide to
sell their highest-priced wnbd's , in the next 2 weeks.
Averaging-down is profitable, for shorters, only.
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