Morning all. Back on deck till the end of the month.
Might as well get straight back into it.
Saw this post on the Easter thread.
"Eg: If I hold many parcels of BHP, purchased over many years. When I choose to sell a portion, I can choose to sell/offset BHP I bought at $17 or BHP that I paid $60. And this choice lets me decide whether I want to realise a profit or loss." (No criticism of the poster intended btw. Just for example.)
This brings up one of my hobby horses. ie. the use of simple maths.
On the surface this bit of advice seems to be a quite sensible use of tax deductions. But does it actually add up at EoD? I think not. The idea that you have made a loss on a stock and then kept it for many years so that you can scratch a few bucks of your payable tax? What about taking into account the $$$s you have lost on the trade and the opportunity cost of having capital tied up?
For me this is the same flawed logic that peeps use to justify holding a losing stock while the SP drops a lot and then cheering when the SP might eventually recover altho they have made zero profit. Ignoring the $$$s that have been lost by selling high and buying low.
In both cases I think peeps use the logic to convince themselves that they have actually come out in front on a losing trade. At EoD it's a simple equation of $$$s in vs $$$s out and there's your profit no matter how you slice and dice it. imo
