Perhaps it is good that I did this action today, because I never
really went into depth
about taxes in this Optimal Strategy. Most of the years from 2002 to
2008 were in
down bear market years and so the taxes are not large. The ideal
situation is for
company A and B to bobb around at a steady pace of say where A is 23
and B is
25 one week and a week later where A is 25 and B is 23 and on and on.
Another good season for switching is in a steep fall of the market
where let us
say VZ drops from 37 to that of 34 and T drops from 39 to that of 30
where
a massive switch makes a huge gain in numbers of shares of T with no
taxes involved since the sale is at a loss.
But in those years of 2002 to 2008 I never really covered in depth
what to do
when the companies stock has risen far higher than when you started.
AT&T
doubled from 2002 to 2008 so switching would mean mostly paying taxes
and no gains of shares.
So, maybe overall, I should have done the action I did today, although
I feel
bad about doing it. I feel bad because I remember a time a few years
ago
when I held 23,000 shares of AT&T (SBC then). And now I have only
about 17,760 Verizon as equivalent.
So if I had not done this action today, I doubt I would have ever
discussed
or delved into this facet of the Optimal Strategy of the tax angle.
Back in
2002 my tax basis was $461,000 and today it is $652,000. So the
improved
tax basis gives me more room to make a switch and still have a gain of
stock shares without all of the gain and then some going to taxes.
Of course some would argue that if it was a IRA account that is tax
free until
a old age, that taxes would never come into the picture.
Now a few weeks back, VZ fell below T in price, for which that had not
happened in
several years, and it was op****tunity that I started to switch from T
into VZ. I remember
it was the date in which the governor of New York was embroiled in a
scandal and
made the remark that perhaps he caused the decline below T. But today
I see in
the ****tfolio this mystery stock of FRP and thought at first it was a
April fools joke.
But brokers never fool around with another's ****tfolio. Then I found
out that FRP was
a spin off of VZ. So I tend to think that the reason VZ fell below T
recently was due
to this spin off. Perhaps it was less than expected and so some sold
causing
VZ to be weak. Anyway, I sold my FRP shares.
And maybe I should keep the ****tfolio in only 2 or 3 stocks with one
switching
campaign.
Perhaps the most valuable lesson I learned in these 5 years was that
if you can find
a good stock such as AT&T, then buy only T in 2002 and simply held on
to it. But that
is difficult to do, so, enter into the picture the Optimal Strategy of
switch campaigning
and in the switching one finds out what the -- best company was. And
then one has
the choice of investing only in that one company or find a switch
partner to it and no longer
diversify.
Archimedes Plutonium
www.iw.net/~a_plutonium
whole entire Universe is just one big atom
where dots of the electron-dot-cloud are galaxies
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