Hello, I purchased a stock at a pretty high price (20 shares at $150) and when it crashed, i kept buying the dips until my price average is the current cost of the stock (currently have 50 shares at $140). I want to pull some money out of the market (in case other stocks dip) as well as I want to invest in other stocks. I sold the 20 shares at $150 for the current market rate of $140. Basically i sold the shares at my average price but chose the highest costing shares to liquidate. My price average went lower to $134 (30 shares at $134). Essentially I wanted to reposition myself at a lower cost average. I know i incurred a paper loss, however, did i incur a real loss? In my mind, as long as i am selling at my average price (or above), I would at least break even if i chose to take a "loss" selling my higher cost shares. I would also reposition myself with a better price average. Is this correct or did I really incur a loss (the difference between the share prices of at 150 vs 140)? thanks!
Any time you buy high and sell low, you have incurred a loss. How your accountant handles it at the end of the year is something he will figure out
Thanks! However, if i have 50 shares of a stock and the average cost is $140, which is the trading price today, wouldn't it just be a wash if i sell today even if take a "loss" on the individual share? In my mind, as long as I sell stocks equal or above my average cost of the share, I am not really losing any money. Basically I bought a bunch of shares in the $100-122 range to drive down my price average. I then sold my higher priced shares when the stock reached my average share price. Ideally, i wanted to replace the higher priced shares with the lower priced shares. Is this correct?
Correct, if all you did was sell low, but then buy in even lower, you have effectively lowered you average cost, which is a good thing if you are bullish and the stock goes up.
Thank you! Logically it makes sense but I wanted to check to make sure that I am thinking about it clearly. I want to use this strategy on tech stocks like Tesla or Etsy where i bought some of the shares way too high so I started pick up more shares when they nose dived. Basically I want to reposition myself with a lower price average without losing any of my principle. Would it be safe to say that as long as i am selling shares equal or above my price average, it is probably more beneficial to liquidate my highest costing shares first so it will drive down my price average even if I incur a "paper" loss. In reality, I just replaced higher costing shares with lower costing shares since i sold it at my average cost.
That works great while a stock is going down, but its going suck when you sell and the stock starts going higher, and never comes back down.
