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Author: mikeg1382 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Sell and buy again? Date: 4/22/2002 6:47 PM
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I am fairly new to investing, and I am not sure this is the right place to post this, but any help would be appreciated.
A while back I bought 15 shares of GE at $38, and now they are down to $32. Should I sell them, then buy again at this price? I am pretty sure that the company is not going under and their price will rise again, but it would be a short term sale (under a year) and I am not sure if it would be worth it. I would also like to get a Foolish perspective on this. Thanks in advance!


Mike in NJ
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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34306 of 75383
Subject: Re: Sell and buy again? Date: 4/22/2002 7:08 PM
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Um, well, you're not really giving us enough info here. :-) What would be your goal in selling, then repurchasing? For some reason, I feel like you are trying to lower your cost basis, but are you considering that you are taking a capital loss by selling? (You bought them for $570, but you are only going to get $480 if you sell now.) Are you trying to offset capital gains elsewhere in your portfolio? I'm really not sure where you are going with this. Based on the info on the table, I would say hold what you have, if you feel like the company is sound. If you like the $32 price, then buy more.

Thanks!
Joe

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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34307 of 75383
Subject: Re: Sell and buy again? Date: 4/22/2002 7:30 PM
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mikeg1382: {{{{I am fairly new to investing, and I am not sure this is the right place to post this, but any help would be appreciated.
A while back I bought 15 shares of GE at $38, and now they are down to $32. Should I sell them, then buy again at this price? I am pretty sure that the company is not going under and their price will rise again, but it would be a short term sale (under a year) and I am not sure if it would be worth it.}}}}

joebedford: "Um, well, you're not really giving us enough info here. :-) What would be your goal in selling, then repurchasing? For some reason, I feel like you are trying to lower your cost basis, but are you considering that you are taking a capital loss by selling? (You bought them for $570, but you are only going to get $480 if you sell now.) Are you trying to offset capital gains elsewhere in your portfolio? I'm really not sure where you are going with this."

I am as in the dark as joe. Also, you do not appear to be aware of the wash sale rules. If you repurchase within 30 days of the sale, it is a wash sale and recognition of the loss is delayed. And, it does no good to buy the replacement shares within the 30 days before the sale, because that would also make it a wash sale.

The FAQ on the Tax board covers this topic (wash sales) well. When you understand the wash sale, I would still ask why you propose to do what you are proposing. Plus, you seem to be ignoring transaction costs; even a $10 commission on a $500 buy/sell transaction is 2%.

Regards, JAFO






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Author: mikeg1382 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34309 of 75383
Subject: Re: Sell and buy again? Date: 4/22/2002 10:33 PM
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<<<What would be your goal in selling, then repurchasing? For some reason, I feel like you are trying to lower your cost basis,>>>

<<Also, you do not appear to be aware of the wash sale rules.>>

Both about right, and thanks for the input. I had heard of a wash sale, but I didn't really know what it was. Like I said, I am a beginner and mostly deal with DRiPs so far. I was thinking of lowering my cost basis, then buying more shares and depositing them into a DRiP plan in the future (still not sure if I want to DRiP GE) but I wasn't sure if that made a lot of sense. That's why I come to you folks! I only hope that one day I will have enough knowledge to be able to add to these boards instead of just asking questions.

Mike in NJ

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Author: joebedford Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34318 of 75383
Subject: Re: Sell and buy again? Date: 4/23/2002 4:39 PM
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Stick around. Where do you think we learned a lot of this stuff? :-) Although, if the Fool will allow me to plug a "competitor", I have found Morningstar.com's "University" to be another wonderful learning resource as well. I think it would be wonderful for a beginner. Better yet, it's free. :-)

Welcome aboard!

Thanks!
Joe


Both about right, and thanks for the input. I had heard of a wash sale, but I didn't really know what it was. Like I said, I am a beginner and mostly deal with DRiPs so far. I was thinking of lowering my cost basis, then buying more shares and depositing them into a DRiP plan in the future (still not sure if I want to DRiP GE) but I wasn't sure if that made a lot of sense. That's why I come to you folks! I only hope that one day I will have enough knowledge to be able to add to these boards instead of just asking questions.

Mike in NJ


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Author: magiquedarkayne Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 34330 of 75383
Subject: Re: Sell and buy again? Date: 4/24/2002 6:06 AM
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Mike,nothing wrong with asking thoughtful questions.Had it pointed out to me( I feel the same way you do about making meaningful additions)by a rather savvy longtimer here(in an email) that if it werent for folks asking questions half the power of this board would be gone. Made me feel a lot better about being the "village idiot" ROFL

regards.
Magique

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