RE: RE: RE: RE: Long and sold some shares tis weekAgain this is an unwanted situation in which I got caught. Now, instead of complaining, I try to make the out of it.
I made a mistake by not selling some YLO back then. I believed in the company and I still do. This is the reason I want to sell as few shares as possible.
I made quite a bit of capital gain in march by selling EIF, ARF, DF, STB, CHE.UN, PBH, GCL, CLC and FMD. To explain myself, here is an example (not real figures of my situation, only to get to my point):
Capital gain: 100k$
YLO position: 100k shares, avg price of 5.50$, yield of this position 11.8%
Recent price: 3.50$, capital loss of 2$/share
Now, let's sell 50k shares, thus a capital loss of 100k$ and a loss of 32500$ / yr in div.
Net capital gain or loss = 0$ after the transaction
Use the money 50k shares X 3.50$ = 175k$
Now buy, as for example, DGS (safer) at 9.00$. 175000$ / 9.00$ = 19440 shares at 1.20$ div/yr/sh or 23328$/yr.
If you are more daring, FTN (riskier) at 9.00$. 175000$ / 9.00$ = 19440 shares at 1.508$ div/yr/sh or 29315$/yr.
Then, collect div (provided unit is worth more than 15$ for either DGS or FTN), wait for market to recover. Sell DGS or FTN with a capital gain and reassess money to other stocks worth the investment at that point.
Saving 100k$ (or 50k$ after 50% reduction). You still save 20k$ to 25k$ in tax. Thus giving you time (roughly 2+ yrs) to go thru this down market and wait for things to get better.
Now it can also get to another level if you use margins. YLO below 5$ and above 3$/sh is marginable at 50%. FTN is marginable at 70% and DGS is marginable at 50%. With interest at 2.5 to 3.5% on margins depending on your specific situation, you could en up you a gain in dividend income.
Anyway, I'm not saying to do it. This is food for thoughts. Each individual situation has to be analysed to make decision.
glta
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