# Finally Got Rid of the Dog



## Emma (May 18, 2013)

Every month my investment statement shows this embarrassing Nortel loss. Did I really think it would come back from the dead? In my new learning phase I decided to clear out this burden and crystallize the loss. Original purchase was Bell but then made the mistake of buying more Nortel on the way down. What an idiot I was. Are there any stocks in the market today that buyers are falling all over? I want to make sure I don't buy it.


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## 6811 (Jan 1, 2013)

I did the same with ARG a month or two ago. It became a penny stock in '09, seemed to be recovering in 2010/11 but sits at 50 cents today.


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## GoldStone (Mar 6, 2011)

Emma said:


> Are there any stocks in the market today that buyers are falling all over? I want to make sure I don't buy it.


Yes. Multinational megacap dividend payers in the defensive non-cyclical sectors, such as consumer staples or healthcare.

*JNJ is up 20 weeks in a row.* This is a record for any stock since 1990.

Names like JNJ are a strong magnet for bond refugees. Folks move from bonds to "safe" dividend stocks in search for yield. I put "safe" in quotes because safety is a function of the price you pay. Some of these "safe" names trade at the sky high P/E-s.


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## jmarks (Feb 14, 2012)

I'm still hanging onto my DOG just to show me how hard it is to sell a stock and what happens when you don't have a solid plan. 
2000 shares of Yellow Media turned into 10 shares of "Y", avg pps is $948 !!

Think I'll ever get my money back lol


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## marina628 (Dec 14, 2010)

Well my dog is XCS -31.96% Followed by CNQ -15.83% .


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## daddybigbucks (Jan 30, 2011)

I know the feeling. I used to hold on to DOGs in case they came back, but i find psychologically, its alot better to just move on.
Now i sell the dogs for a loss and in a month, i forget all about them.

We are always going to get dogs, just got to have more winners than dogs.


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## humble_pie (Jun 7, 2009)

extreme dog stories such as nortel are usually worth keeping in an account, in deep freeze mode.

they can't depreciate any further & there's almost no cash that can be raised by selling them. So other than tidy visual housekeeping, there's no advantage to dumping them.

when kept in cold storage, their potential value can be realized some year in the future when investor has a big capital gain. At that point the loss can be crystallized to offset part or all of such a gain.

it's true that losses can be carried forward. However carried-forward losses are claimed in later lines in tax returns; some provincial tax returns, in particular, have surcharges, extra taxes & fees that are based upon total income lines, which are early-stage tax calculations.

total income will include this year's losses but not carried-forward losses, so usually it's worth keeping extreme dogs in the freezer until the year that they are needed.

sometimes, in seniors' account, one sees old stock holdings that have appreciated enormously over several decades. Usually, in such cases, accountholders, advisors & heirs are nervously wondering what to do about the giant capital gains tax bite that will occur upon death. In such an account, a good advisor will keep any extreme dog stocks that are present alive in the account, in deep freeze mode. They are to be used to offset the final capital gains calculation.

stocks that still have downside risk are not suitable candidates for cryo-preservation, though.


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## My Own Advisor (Sep 24, 2012)

I'm with ya humble, re: can't go down any/much lower.

I also keep dogs in my account to remind me of the mistakes I've made, vowing to never repeat them again.


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## Emma (May 18, 2013)

Is this another mistake? and I haven't even put the MF money in the market yet. Those big red numbers on the statement were really bugging me!!!


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## kcowan (Jul 1, 2010)

Why not take the capital loss asap?


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## humble_pie (Jun 7, 2009)

kcowan said:


> Why not take the capital loss asap?



gosh i just mentioned why huge losses - ie down to pennies - should be deep-frozen instead of being sold.

it's a legitimate reason. The best advisors are doing this!

(to emma) of course you didn't make a mistake. I only posted my message so that others wouldn't get carried away in a frenzy of spring cleaning.

old stocks that have collapsed down to near zero value can, in fact, rise again & bloom when they are called upon, at some future date, to serve as tax losses that will reduce a future capital gain.

even here, there are 2 glitches to watch out for: 1) don't do this with any loss that is not yet complete, ie if stock can still plunge further it's not a cryo-freeze candidate; 2) be careful that stock does continue to trade, even if trading is only in pink or grey OTC markets. If ever the bids totally dry up, then investor won't be able to sell for a tax loss!

meanwhile (emma again), if you won't need your Nortel loss to offset gains in 2013, please don't forget to carry the loss forward in your tax files.


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## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> extreme dog stories such as nortel are usually worth keeping in an account, in deep freeze mode.


humble_pie is making a very important observation on the tax code here. It is worth paying attention to. If you receive income-tested benefits such as CCTB or OAS, regardless of your province of residence, this tip could possibly save you money.


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## humble_pie (Jun 7, 2009)

CanadianCapitalist said:


> If you receive income-tested benefits such as CCTB or OAS, regardless of your province of residence, this tip could possibly save you money.


... or if you die each:


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## HaroldCrump (Jun 10, 2009)

I am willing to "volunteer" my services to high net worth individuals to help them find and invest in such dog stocks for the purposes of tax planning.
I have an innate ability to find dog stocks that can lose 90% of their value within a matter of months.

I will only charge 3% of AUM for these invaluable services.


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## Toronto.gal (Jan 8, 2010)

You're hired! :biggrin:


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## humble_pie (Jun 7, 2009)

excellent new business idea.

we are getting such a rush of rich ladies these days. Would you be able to do any, ah, _chauffeuring_ for the clients as well?

we have to establish whether your rate is 3% of book or 3% of market, though.


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## kcowan (Jul 1, 2010)

humble_pie said:


> If ever the bids totally dry up, then investor won't be able to sell for a tax loss!


Unless it becomes delisted and then your broker can dispose of it for you. In my case, I am trying to clean up DWs portfolio but timing it to offset gains. (Enron, Bre-X fortunately no Nortel.)

OTOH there seems to be a consulting business here. Who knew? 

(When I first saw this item, I thought of Belguy!!!!)


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## Four Pillars (Apr 5, 2009)

humble_pie said:


> we have to establish whether your rate is 3% of book or 3% of market, though.


Haha - good point.


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## HaroldCrump (Jun 10, 2009)

OK, OK, fine I will take 3% of actual tax savings, alright.
Geez guys, I am just a honest hard-working financial advisor trying to scrape out a living here.

You need to save $100K of capital gain taxes in a year, fine, I'll invest you in stocks like Yellow Pages, Swisher, Catch the Wind, etc. (trying to recall some of the names from the past) and make sure you won't have a capital gains problem once I am done with you.

Then, all I ask is 3% of the $100K for my expertise.


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## humble_pie (Jun 7, 2009)

HaroldCrump said:


> OK, fine I will take 3% of actual tax savings, alright ... 3% of the $100K for my expertise.


lovely offer, lovely.

thank you. But in truth, nobody needs to pay an advisor. All they need to do is keep reading doKtor's posts.


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## thompsg4416 (Aug 18, 2010)

Can someone enlighten me? For curiosity sake I had a look and nortel is still trading shares.. At .01 per share and with volume over 200k. A gain for 25%!! WTF? I don't get it. You can only book a capital loss if you bought the shares when they were actually worth something then lost their value....I thought anyway. Anyone care to clarify?


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## Emma (May 18, 2013)

Nortel declared bankruptcy in Jan 2009 and was delisted from the TSX in June 2009. My shares were actually worth something in 2001 (ouch!). Selling them now for .01 would probably cost more than the trading fee.


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## thompsg4416 (Aug 18, 2010)

Emma said:


> Nortel declared bankruptcy in Jan 2009 and was delisted from the TSX in June 2009. My shares were actually worth something in 2001 (ouch!). Selling them now for .01 would probably cost more than the trading fee.


I hear you.. Nortel is still trading on the NYSE though..


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## doctrine (Sep 30, 2011)

The company still exists. They have about $7.3B cash on the books from selling all of their assets. There are plenty of claimants for the cash though, and the stock is essentially worthless. At some point it will dissolve but it may take years in the courts.


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## thompsg4416 (Aug 18, 2010)

doctrine said:


> The company still exists. They have about $7.3B cash on the books from selling all of their assets. There are plenty of claimants for the cash though, and the stock is essentially worthless. At some point it will dissolve but it may take years in the courts.


So why would someone have an interest in buying it? Over 200k shares traded on Friday.. That's a lot of shares for a bankrupt company not producing anything....


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