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Last minute tax loss battered bargain bin.
flower
post Posted: May 28 2013, 04:58 PM
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QUOTE
Now I'm confused, flower:
Wasn't "tax-loss selling" supposed to reduce the profits from successful trades in the earlier part of the FY, so the smart investor (who had made lots of Capital Gain) would save tax? Are you now saying, people are selling early for less profit, so they can make up for past losses?
Either way, it seems a rather irrational way to determine when to sell. Last time I looked, you only pay tax on profits made. And if you happen to incur an overall loss, there are ways to carry that loss forward into subsequent Financial Years. Given that, why worry about the EOFY at all? If I had a choice, I'd love to receive a $1M tax bill - because that meant I'd made at least $2.5M profit.


arty's post moved from the NST thread here where it quite possibly belongs:

Hi arty, am sure you are to be congratulated in such a stellar annual performance, however think you also realise than not everybody here nor certainly in the wider share owning public possess your skills.

QUOTE
Methinks the sequence of words needs some rearranging:
"the general advice 'Sell in May and go away' was in retrospect best ignored."

"Buy low, sell high" has made the month of May my second most profitable month since 2008

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The point I was trying to make is/was that if one was nursing losses of 30/40% in resource stocks which many are, any profits available in stocks like NST for example would likely be sold as profit takers in tandem with selling loss makers if only to limit the overall dilution in ones trading capital.

Realise its not an ideal situation to be in-- but many are, if the pundits are correct the AUD is to continue going down, the USD to continue rising which makes the longer term holding of any resource stock a threat to ones capital base, and it may well be necessary to completely review ones position taking for investing/ trading in FY 2013/14.

Personally don't agree with that thesis but have to be aware that might happen in 2013/2014, so it's just a matter of individuals deciding whether they want be in the resource area at all next trading year, and this may be just as good as any time to bite that bullet, or at the very least start thinking seriously in that direction.



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Combining Fundamental comments with Fundamental charts.
 
flower
post Posted: May 28 2013, 02:47 PM
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In Reply To: arty's post @ May 28 2013, 11:51 AM

QUOTE
Sell in May and go away was in retrospect the best advice generally ignored


not quite what I posted:

""Sell in May and go away was in retrospect the best advice generally ignored re the resources sector.""



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Combining Fundamental comments with Fundamental charts.
 
arty
post Posted: May 28 2013, 11:51 AM
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In Reply To: flower's post @ May 28 2013, 11:31 AM

QUOTE
Sell in May and go away was in retrospect the best advice generally ignored

Methinks the sequence of words needs some rearranging:
"the general advice 'Sell in May and go away' was in retrospect best ignored."

"Buy low, sell high" has made the month of May my second most profitable month since 2008, and I might just make $73 to get me over the line for that extra bonus.



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I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
flower
post Posted: May 28 2013, 11:31 AM
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IMO it is reasonable to now expect an avalanche of end of year tax loss selling to start in the already battered commodity section, wearing a contrarian's hat however --will June 2013 be bargain basement buying time? (not for me this time around).

Sell in May and go away was in retrospect the best advice generally ignored re the resources sector.



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Combining Fundamental comments with Fundamental charts.
 
flower
post Posted: Jun 21 2010, 02:22 PM
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It's not unreasonable to expect a pick up in tax loss selling for the next 9 days--bargains aplenty--depending on world events.



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Combining Fundamental comments with Fundamental charts.
 
mistagear
post Posted: Jun 3 2010, 02:54 PM
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In Reply To: arty's post @ Jun 3 2010, 02:26 PM

QUOTE
If a trader stuck to a consistent strategy


Hell.... I'm in trouble.... "consistent" you say... geez unsure.gif



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Said 'Thanks' for this post: arty  
 


arty
post Posted: Jun 3 2010, 02:26 PM
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In Reply To: sirob's post @ Jun 3 2010, 02:12 PM

No argument there, Sir;
the point I tried to make was about "patterns of behaviour":
If a holder would only - or predominantly - sell duds in June, while hanging on without stop-loss for most of the other time, the ATO would smell a rat.
If a trader stuck to a consistent strategy: buy low, sell high, stop loss - the ATO's clever data mining programs wouldn't even trigger.



--------------------
I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
sirob
post Posted: Jun 3 2010, 02:12 PM
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In Reply To: arty's post @ Jun 3 2010, 12:43 AM

QUOTE
Specifically, that would mean that a trader can more easily "time" any sales because he is quite regularly selling stock for profit (or, if he is smart, to limit losses). Whereas a share holder would become conspicuous when, just "coinciding with tax-time", he discovers that he has some duds (as 99% long-term holders may indeed have) which he just so happens to wish to offload.


Hello arty,
Whilst I basically agree with your reasoning it is my understanding that a trader or an investor can sell a loss making stock any time he so chooses and can come up with a range of reasons if queried by the tax office as to the timing and motives and not a thing the taxation dept can do. However if the trader immediately purchases them back that would be much harder to explain and the taxation dept would no doubt say that was deliberately creating a tax loss and would be hard to deny. Should you wish to buy back make sure that you allow a reasonable time between sell and buy and that you can explain the reason for re purchase.

 
flower
post Posted: Jun 3 2010, 01:05 AM
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In Reply To: arty's post @ Jun 3 2010, 12:43 AM

"While the Tax Office considers each case on its individual features"



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arty
post Posted: Jun 3 2010, 12:43 AM
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Rather than making assumptions based on dubious blog sites and personal prejudices, why not go to the authoritative source and let the ATO explain the difference between trader and investor:

http://www.ato.gov.au/businesses/content.a...m&page=1#H1

In particular, it states:
QUOTE
The difference between a share trader and a share holder
The way in which income and expenditure are dealt with in relation to shares varies depending on whether you are a share trader or a share holder.

While the Tax Office considers each case on its individual features, in summary a share trader is a person who carries out business activities for the purpose of earning income from buying and selling shares. This person's position may be briefly summarised as:
  • receipts from the sale of shares constitute income
  • purchased shares would be regarded as trading stock
  • the nature, regularity, volume and repetition of the share activity are consistent with those of a share trading business
  • costs incurred in buying or selling shares are an allowable deduction in the year in which they are incurred, and
  • dividends and other similar receipts are included in assessable income.
A share holder is a person who holds shares for the purpose of earning income from dividends and similar receipts. This person's position may be briefly summarised as:
  • the cost of purchase of shares is not an allowable deduction, but is a capital cost
  • receipts from the sale of shares are not assessable income however, any net profit is subject to capital gains tax
  • a net loss from the sale of shares may not be offset against income from other sources, but may be carried forward to offset against future capital gains made from the sale of shares
  • costs incurred in buying or selling shares are not an allowable deduction in the year in which they are incurred, but are taken into account in determining the amount of any capital gain
  • dividends and other similar receipts are included in assessable income, and
  • costs (such as interest on borrowed money) incurred in earning dividend income are an allowable deduction at the time they are incurred.

Specifically, that would mean that a trader can more easily "time" any sales because he is quite regularly selling stock for profit (or, if he is smart, to limit losses). Whereas a share holder would become conspicuous when, just "coinciding with tax-time", he discovers that he has some duds (as 99% long-term holders may indeed have) which he just so happens to wish to offload.



--------------------
I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
 


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