Purchasing/Selling Stocks

Discussion in 'Investing' started by JasonR, May 24, 2021.

  1. JasonR

    JasonR New Member

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    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!
     
  2. StockJock-e

    StockJock-e Brew Master
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    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 :)
     
  3. JasonR

    JasonR New Member

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    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?
     
    #3 JasonR, May 24, 2021
    Last edited: May 24, 2021
  4. StockJock-e

    StockJock-e Brew Master
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    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.
     
  5. JasonR

    JasonR New Member

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    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.
     
  6. StockJock-e

    StockJock-e Brew Master
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    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.
     

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