correction getting much closer now., page-57

cwliew

You would be correct if the entire portfolio was in the money. But if you have some stocks that are not, then then it is not a bad idea to sell the duds for a capital loss. Then sell off some of the profit makers and amortise the capital gain against the capital loss. You then repurchase the good stocks for around the price you sold them for and you end up with an improved portfolio with little or no capital loss or gain. This is called "washing out" and is a technique to get you out of trouble when you are exercised on an option, but can be used to get rid of troublesome stocks without significant loss. By the way it is frowned upon by the taxation dept, so to make it to their liking you should do the buying and selling in different financial years, which is why this technique is popular this time of the year.