Archimedes Plutonium wrote:
> ****tfolio of PAF on 2APR08
>
> T 200
> VZ 16,590
> Q 4,000
>
> total share-wealth-units last re****ted which was 1APR08 was 17760
> total share-wealth-units today 17790** (** where Q shares count as
> 1/4 share-wealth-units)
> realestate land 3APR03 of 3 lots $19,000.
> realestate land 30JUL03 another lot $11,500.
> realestate land Sept05 another lot $75,000.
>
> One of my rules of thumb is to be fully invested. I remember a
> remarkable woman
> once say to me "don't you want that money to be working?" And I can
> picture
> in my mind those paper dollar bills with shovel and spade out there
> preparing
> the Spring fields.
>
> But anyway, with the big trades of yesterday and with the sale of FRP
> which
> was a Verizon spin off yesterday ( and only a distraction to my
> ****tfolio with
> its focus on Crossover and Switching Campaigns) I sold the FRP
> yesterday
> at $8.43 a share. So with that cash and some leftover cash I bought
> 30 more shares of Verizon.
>
> Why Verizon and not AT&T? Because VZ is cheaper than T today and
> just setting up for a Crossover Switch.
>
> A second rule of thumb for me pertains to what is the minimum amount
> of
> stock to buy with cash leftovers? My rule of thumb here is whether the
> small amount can pay for the brokerage by the upcoming quarterly
> dividend.
> So 30 shares is about the smallest minimum.
>
> And FRP just maybe the reason that VZ is lower than T as of recent, in
> what
> can be called selling for lost expectations.
>
> Now I am doing some past history research as to the price of SBC in
> October
> 2002 and the price of VZ back then. And from an old statement of mine
> that on 11OCT02 I sold 2,000 SBC at $22.10 and sold on that same day
> 800 VZ at $33.25. I should make a separate post on this information as
> I want
> to review and recalibrate the ****tfolio.
>
Some may say that because I landed on tough times with SGP and sold it
that this rethinking and recalibration is an excuse. I do not look at
it that
way. For I look at it as a turning point in my education of the
Crossover
and Switching Technique. I look at it as though the strategy needs
some
fixing and patching and that I do not have the full strategy but only
a
major segment of the full strategy. And what I neglected and failed to
factor into the full Strategy is the tax ramifications. Now if it were
a IRA
account then the Crossover is a full strategy because taxes do not
take
a cut out of every switch with a gain. But since PAF is not a IRA
account
the taxes have to be factored into the OS fully.
PAF opened for business on 3 October 2002 with capital of $461,000
and bought shares of BCE, BellSouth, BMY, Deutsche Telekom, Qwest,
SBC, SGP, and Verizon.
Specifically it bought 1,000 SBC at $21.60 and 1,000 Verizon at
$32.70.
Now, here is the rethink or recalibration.
21.60 divided into $461,000. equals 21,340
32.70 divided into $461,000 equals 14,090
Now here is the question of im****tance for me to ask. Could I have
said in 2002
that of all those stocks and others, which would fare the best in that
time period
and bought only that one stock? Well, I sensed it was SBC, but the
strategy
of Crossover Switch did not allow me to say buy 21,340 of SBC and stay
pat
for all that time.
It is of credit to the strategy that I have more than 14,090 shares of
VZ today
not counting the real estate that I was able to purchase with the
dividends in those
years.
So, yes, I encountered a fall with selling SGP, but the strategy
blunted that fall.
If in 2002, I had bought only VZ at 32.70 would have given me 14,090
on a tax
basis of $461,000.
Here in 2008, I rest on 16,590 with a tax basis to maneuver of approx
$650,000
(I have not computed the precise basis yet).
So if I had bought only VZ in 2002 would be 14,090 on a basis of
461,000
whereas now in 2008 I rest on 16,590 with a basis of 650,000
Now I could have sat pat yesterday and said to myself, well, just ride
it out on
SGP. Ride out SGP until it exceeds the price of BMY and switch over
into
BMY with a nice tidy gain in stock shares. And this will probably come
to
pass and fruition. However, sometimes the time of life of an investor
is more
im****tant than the "riding out". And if I did ride out the SGP
crossover of
BMY, there is no assurance that in the switch that I would be
confronted
with the problem of the tax basis. Suppose SGP crosses over BMY at
a price of $26 and $24, and so the tax gains would have made the
switching
a loss.
What I was hoping and expecting before the Vytorin sank was that SGP
would be sold as a company and the buyer would give shares of stock
such as Pfizer buying SGP and then giving shares of PFE for every SGP
share. In that manner, the taxes are deferred until sales of PFE
initiated.
So my decision to sell on 1 April of the SGP and AT&T to buy VZ was
on the recognition that I rather have alot of VZ and to recalibrate
the
tax basis of the ****tfolio from 461,000 to that of 650,000 which would
be
better than to ride out a drug storm of SGP. Time of a person's life
is valuable and at my age of 58 and in focus of doing science, I feel
it better
to have made that VZ switch.
Now the reward of making that VZ switch is that this book on the OS
of playing the stockmarket has to be expanded to include taxes.
Playing the StockMarket is as complex if not more so than the OS
of chess. And chess has what is known as three segments of the game
opening, middle game and endgame. So if Chess has at least three
segments, playing the Stockmarket should be at least as complex if
not more so than chess. And for me to think that Crossover Switching
is the one and be all of the OS of stockmarket is pretty naive of me.
For one, I never included a taxing ****tfolio versus a nontaxing (IRA)
****tfolio.
So, yes, I am happy for yesterday's switch for it opens up a newer
education
and enlightenment of the OS of playing the StockMarket.
Archimedes Plutonium
www.iw.net/~a_plutonium
whole entire Universe is just one big atom
where dots of the electron-dot-cloud are galaxies
|
