Some have taken great tax loss benefits from those shares... and then rebuilt new positions at much lower cost basis...
Yeah. Sure they have. Let's see how that would work:
OK, in July 2011 I take flyer on MDMN, great "KABOOM" is on the way!
I pay $10,000 for 87,500 shares ($.1143.share)
Summer of 2013, I've had enough, so I sell it all at $0.05/share.
My $10,000 is now down to $4,375. But, to give the benefit of the doubt, let's say I held the stock in a taxable account and my recognized loss shielded other gain, so the tax benefit under this most rosy scenario would be $843.75 (15% of my loss). Wow, some "great" tax benefit there! (In the spirit of the holiday season, I'll ignore the fact that many if not most of MDMN retail investors hold the stock in IRA type accounts that realize ZERO tax benefit from recognized capital losses)
With my adjusted account balance of $5,218.75 I buy another 180,000 shares at an average price $0.029 between January 2014 and now.
Today I look at my brokerage statement- 180,000 shares are worth $2,376. I've lost $7,624 of the $10,000 I started with. During the same timeframe the DOW Ind. Avg. has gone from 12,569 to 17,612, so I basically didn't just lose 76% of my money, I also missed out on easy market return of 40% (opportunity cost). Instead of $14,000, I have $2,376 under your investment strategy. And I'm even ignoring dividends on DOW stocks and brokerage fees on transactions.
But wait, what is that you say, Big Baboon? Another BIG KABOOM is coming! OK, let's see how that works out:
Say MDMN goes up 280%(!) to $0.05- now my 180k is worth 9,000. Five years and I'm down 10% when the market is up over 40%, and that is assuming MDMN nearly triples from today's numbers.
Why not shoot for the moon- $0.072 (illogically calculated as the base price assuming AURYN exercises option)- Weee! I'm up to $12,900! I've averaged less than 5% return per year on a STUPIDLY risky investment and MISSED OUT on nearly 50% of market return in one of the GREAT BULL MARKETS of our lifetime. This is under the CRAZY assumption the stock is going up 450%(!!!) from here. Yeah. Right.
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