# What is considered a sell at loss / losing money?



## MrBlackhill (Jun 10, 2020)

If I buy a stock $10 and then I sell it $5, that's a loss. Easy.

If I buy a stock $10, it soars to $30 within a few months, then drops -50% to $15 by the end of the year and I sell it at $15. Is it a sell at loss?

If I buy at stock $10 in 2000, it goes up to $40 throughout the next decade, peaking in 2010 and then it drops -25% throughout the next decade and I sell it at $30 in 2020, is it a sell at loss?

If I buy a stock $10 on year 1, then $15 on year 2, then $20 on year 3, then the stock drops -20% and I sell at $16 on year 4, is it a sell at loss? (XIRR is positive for the cashflow)

If I buy a stock $10 in 2000, then $15 in 2001, then $20 in 2020, then $25 in 2021, and I sell at $18 in 2022, is it a sell at loss? (XIRR is slightly positive for the cashflow)

What is selling at loss? Since the market is volatile on different scales, when do we consider that we are losing money?

We should consider the present value of our portfolio as money we truly have (after all, we could cash in the full portfolio at any moment), so as soon as the portfolio goes down, we are at loss.... Or at least we are losing money. But the market is volatile and we can't time the volatility perfectly, so it's normal the go for a stock to go down for one day, one week, one month, but one year? 5 years? 10 years?


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## Eclectic12 (Oct 20, 2010)

Selling for more than one's cost is a gain from a tax perspective ... no matter that one _could_ have sold for a bigger gain while one held it.

That's why there is the term "paper gains/losses" or "unrealized gains/losses".

If PV = "money we truly have" then I've had big gains then big losses and then middle of the road gains when selling. I have also had stocks whose PV was a loss versus cost for years (and a bigger loss versus previous a previous PV high) that one selling was a gain.


Personally, I keep taxable gains and losses separate as those are the ones I have to pay taxes on versus the "could have, should have and didn't" values that market trades at.


Cheers


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## MrMatt (Dec 21, 2011)

MrBlackhill said:


> If I buy a stock $10 and then I sell it $5, that's a loss. Easy.


Proceeds - Cost = Profit
$5-$10 = -$5 ( loss)



> If I buy a stock $10, it soars to $30 within a few months, then drops -50% to $15 by the end of the year and I sell it at $15. Is it a sell at loss?


$15-$10=$5 (profit)


> If I buy at stock $10 in 2000, it goes up to $40 throughout the next decade, peaking in 2010 and then it drops -25% throughout the next decade and I sell it at $30 in 2020, is it a sell at loss?


$30-$10 = $20 (profit)


> If I buy a stock $10 on year 1, then $15 on year 2, then $20 on year 3, then the stock drops -20% and I sell at $16 on year 4, is it a sell at loss? (XIRR is positive for the cashflow)


$16-$10 = $6 (profit)
$16-$15= $1 (profit)
$16-$20 =-$4 (loss)
assuming 1 of each, total of $1 profit



> If I buy a stock $10 in 2000, then $15 in 2001, then $20 in 2020, then $25 in 2021, and I sell at $18 in 2022, is it a sell at loss? (XIRR is slightly positive for the cashflow)
> 
> What is selling at loss? Since the market is volatile on different scales, when do we consider that we are losing money?
> 
> We should consider the present value of our portfolio as money we truly have (after all, we could cash in the full portfolio at any moment), so as soon as the portfolio goes down, we are at loss.... Or at least we are losing money. But the market is volatile and we can't time the volatility perfectly, so it's normal the go for a stock to go down for one day, one week, one month, but one year? 5 years? 10 years?



The stock gain/loss is on the trades, the intermediate values on your net worth are that.
You could recalculate your portfolio value every second if you want to, and some people do.


Also the "price" of a stock is what the most recent trade was, that's not the same as what you can sell your position for at any particular time anyway.


This is part of the whole "net worth" game people play, depends on the purpose.


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## OneSeat (Apr 15, 2020)

Huh?


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## MrBlackhill (Jun 10, 2020)

I get the maths, that's not my question. It was unclear, sorry. My question is more philosophical.

You are telling me that you take time to consider every single trade you've made?

And what if you bought a stock $10 in 2000, then it soared to $50 in 2001 and then since the last 20 years it has been drifting down to currently $12 in 2021. From a per-trade basis, you've made money on your investment. But the truth is you are losing money since the peak $50 value of 2001. Aren't you? Depends how you see it.

Because if you look at it on a per-trade basis, then if you put a lump sum of $1,000,000 in 2000, never touched it, then it soared to $3,000,000 in 2021 and crashes to $1,500,000 in 2022, you'd tell me that you haven't lost money?

And even if you look at it easily on a per-trade basis, do you consider your sells as FIFO or LIFO or average cost or...

What I mean is :

You bought 1 stock at $10 in 2000
You bought 1 more of that stock at $15 in 2010
You bought 1 more of that stock at $20 in 2020
If you sell 1 stock $16 in 2021, are you making money because FIFO says you sold $16 the stock you bought $10 in 2000 or are you losing money because LIFO says you sold $16 the stock you just bought $20 or are you making a little money because you sold $16 a stock that cost you an average 15$/share or you don't care as long as your XIRR is positive or...


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## nobleea (Oct 11, 2013)

This is no more relevant a discussion than if you bought at $10, sold at $30, then watched it rocket up to $70 shortly afterward. You didn't sell at a loss there. There was hypothetical money left on the table, but thats it. Same as if you bought at 10, went up to 70, then sold at 30.

The one that might be more interesting is making 10% on a US stock in USD, but breaking even or losing money on a CAD basis due to CAD strength. Obviously not a great investment, but your thesis about the company and industry may have been correct.


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## cainvest (May 1, 2013)

MrBlackhill said:


> You are telling me that you take time to consider every single trade you've made?


Doesn't everyone? I certainly do.



MrBlackhill said:


> And what if you bought a stock $10 in 2000, then it soared to $50 in 2001 and then since the last 20 years it has been drifting down to currently $12 in 2021. From a per-trade basis, you've made money on your investment. But the truth is you are losing money since the peak $50 value of 2001. Aren't you? Depends how you see it.
> 
> Because if you look at it on a per-trade basis, then if you put a lump sum of $1,000,000 in 2000, never touched it, then it soared to $3,000,000 in 2021 and crashes to $1,500,000 in 2022, you'd tell me that you haven't lost money?


A gain or loss can only be calculated after one sells what they bought, in other words, realized gains/losses.

Of course you can calculate "paper" gains or losses at any time but what's the point in that?


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## MrBlackhill (Jun 10, 2020)

nobleea said:


> This is no more relevant a discussion than if you bought at $10, sold at $30, then watched it rocket up to $70 shortly afterward. You didn't sell at a loss there. There was hypothetical money left on the table, but thats it. Same as if you bought at 10, went up to 70, then sold at 30.


Interesting. It's about the opportunity cost. In the first case, it's an opportunity cost because you couldn't know it would go up shortly after. In the second case, it's also an opportunity cost because you couldn't know that you should've sold.

But that's also why if I see a stock dropping -30% in a day, I don't feel bad because I certainly couldn't have seen that loss coming. But if I see a stock slowly dropping -30% throughout a full year, then every single day I can take time to reassess my decision to keep holding that stock as I believe it is worth more, but I'm also losing an opportunity to sell higher a stock going in the wrong direction. And if I believe it is worth more, then I should continue buying throughout the year... and continue losing money if I'm wrong.


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## MrBlackhill (Jun 10, 2020)

cainvest said:


> Doesn't everyone? I certainly do.


And do you calculate it FIFO, LIFO, average cost, etc. when you sell?

Back to this example :


MrBlackhill said:


> You bought 1 stock at $10 in 2000
> You bought 1 more of that stock at $15 in 2010
> You bought 1 more of that stock at $20 in 2020
> If you sell 1 stock $16 in 2021, are you making money because FIFO says you sold $16 the stock you bought $10 in 2000 or are you losing money because LIFO says you sold $16 the stock you just bought $20 or are you making a little money because you sold $16 a stock that cost you an average 15$/share or you don't care as long as your XIRR is positive or...


I'm not talking about tax implications, but how you see it.


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## bgc_fan (Apr 5, 2009)

MrBlackhill said:


> And do you calculate it FIFO, LIFO, average cost, etc. when you sell?
> 
> Back to this example :
> 
> ...


ACB when you sell. 

But paper gains and losses are meaningless. All it leads to is pointless second-guessing: should have, would have, and has no real material impact. It's no different then selling a stock, and then watch the price skyrocket months after. Are you going to say you sold at a loss because you didn't hold on until the price went up?
During that time when the stock rose and fell, you didn't sell to cash in on the gains or losses so it's just meaningless thoughts.


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## cainvest (May 1, 2013)

MrBlackhill said:


> And do you calculate it FIFO, LIFO, average cost, etc. when you sell?


Honestly for the small number of "trades" I've done it's always been one buy price, one sell price. If I were to sell something I bought mutiple times it would be on ACB.


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## Eclectic12 (Oct 20, 2010)

MrBlackhill said:


> ... My question is more philosophical.
> You are telling me that you take time to consider every single trade you've made?


Unless you are going to close your eyes and hope the broker's cost numbers are correct (I have found wrong ones), you have to consider each buy to update the cost base.

When you sell, CRA requires you to report so you have to consider that as well.

If the first lot was bought for $5, the next for $3 and the next for $10 - if you aren't considering each trade to update the cost base, how will you know if selling all shares for a particular price is losing or gaining money?




MrBlackhill said:


> ... And what if you bought a stock $10 in 2000, then it soared to $50 in 2001 and then since the last 20 years it has been drifting down to currently $12 in 2021.


Other than kicking oneself for not selling some/all for $50 to learn from it ... what's the point of worrying about paper gains?

What you sell for and can spent is what matters, right?




MrBlackhill said:


> ... never touched it, then it soared to $3,000,000 in 2021 and crashes to $1,500,000 in 2022, you'd tell me that you haven't lost money?


Sure ... but other than learning from the experience, what's the point in tracking paper gains/losses?

By the same token, should I be depressed I was at a paper loss of 85% for five years for far longer that the months I was even? 

Keep in mind that I sold the end of five years for a 200% gain.

Personally, I'm more upset that I didn't act when I thought I'd buy more at the low end, I let distractions stop me. 

Cheers


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## Tostig (Nov 18, 2020)

There are no inflation or depreciation involved. The math and the resulting taxes are as straight forward as you can get. Even if a $1million investment results in a $1 capital gain, it's still a gain regardless of the sentimental value and effort you put into it.


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## Eclectic12 (Oct 20, 2010)

MrBlackhill said:


> ... I'm not talking about tax implications, but how you see it.


And that's a recipe for depression and never doing anything.

I've "lost" far more that I have "made" but my assets and bank account are larger because of some of the sales for a "loss" that tax wise, was a "gain".


Cheers

*PS*
Some of those "losses" retired my mortgage in five years, drastically increasing cash flow.


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## MrBlackhill (Jun 10, 2020)

bgc_fan said:


> ACB when you sell.


I personally don't like the ACB because it doesn't take into account the performance of those trades.










-----

I think that the philosophical question I wanted to discuss is more this one : *When you see one of your stocks dropping over time (losing money), how do you reassess your initial decision (of buying that stock at that price) to decide if you should see this as an opportunity to buy more or keep holding cautiously or sell to cut your losses short as you think you were wrong.*

For instance, let's take a stock everyone knows instead of going into small caps. _Enbridge_. Awesome stock. But its performance for the past 6 years is nearly 0% CAGR. Even though it's not a loss, how do you react to this, considering that its performance used to be 19% CAGR. Buy more? Hold? Time to sell and move to something else? Obviously, it depends of the context and reassessing its value.

-----



Eclectic12 said:


> When you sell, CRA requires you to report so you have to consider that as well.


I must admit I'm a beginner and as I have over $160,000 unused room in TSFA I don't have to bother with tax reporting to the CRA. (Just bought a property and did huge renovations, so I used most of my TFSA)

-----



Eclectic12 said:


> Other than kicking oneself for not selling some/all for $50 to learn from it ... what's the point of worrying about paper gains?





Eclectic12 said:


> Sure ... but other than learning from the experience, what's the point in tracking paper gains/losses?


Totally agree that's a great learning experience.

For instance, I don't track drawdowns as a percentage from previous peak. When a stock drops, I see it the other way : when was the last time it was at that value? Oh, I've erased 3 months of gains? Not too bad.


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## cainvest (May 1, 2013)

MrBlackhill said:


> For instance, let's take a stock everyone knows instead of going into small caps. _Enbridge_. Awesome stock. But its performance for the past 6 years is nearly 0% CAGR.


Is that based on price alone or total return?


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## MrBlackhill (Jun 10, 2020)

cainvest said:


> Is that based on price alone or total return?


Total return.






Backtest Portfolio Asset Allocation


Analyze and view backtested portfolio returns, risk characteristics, standard deviation, annual returns and rolling returns



www.portfoliovisualizer.com


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## cainvest (May 1, 2013)

So you bought in near the absolute peak of ENB and are wondering if it's worthwhile to continue holding or cut your losses right?


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## bgc_fan (Apr 5, 2009)

MrBlackhill said:


> I personally don't like the ACB because it doesn't take into account the performance of those trades.
> 
> View attachment 21454
> 
> ...


Well that's nice you don't want to consider ACB, but otherwise, what you are calculating has no bearing in the real world. At the end of the day, you take the profits based on your proceeds, vs what you paid. The purchase timing may be nice to give you a IRR, but at the end of the day all that really matters is what profit. 

When a stock price drops, well, I look at the reasons that I bought it. Was a long-term hold because it is a blue chip with low likelihood of bankruptcy with steady dividends? Then possibly buy more. Was it a speculative stock and I guessed wrong? Maybe sell. It all depends on why I bought the stock.

How can you be a beginner and have over $160k unused room in TFSA? The cumulative limit is $75.5k, unless you are also counting spousal account or something.


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## agent99 (Sep 11, 2013)

Eclectic12 said:


> Unless you are going to close your eyes and hope the broker's cost numbers are correct (I have found wrong ones), you have to consider each buy to update the cost base.


I have just been comparing BMOIL's trading summary with my own ACB calculations. There were quite a number of differences. Mostly in my favour. But I will use my numbers, as I always have. One of the errors I noted, was because they failed to allow for the last ROC just before I sold a two split corp. ROC was dated March 13 and sale was on April 2nd. Another one was due to the IPL conversion where they must have calculated a different number for my cost back then.

I always double check their numbers against mine. I have made mistakes too, usually to do with + or - trading fee 

Regarding profits or losses? The only time this matters is when you sell.

Loss/Gain for short term holdings is usually same as you have to report for taxes.
However for stocks that pay dividends or distributions or bonds that pay interest, I sometimes consider how much the stock or bond has returned in dividends, distributions or interest. Then compare original cost vs (selling price + income). 

Sort of like a leasing company. The new car they lease may cost them $40k. 4 years later it is returned and they sell it for $20k. In the meantime, they collected $24k in lease payments. Did they make a gain or loss?


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## MrBlackhill (Jun 10, 2020)

cainvest said:


> So you bought in near the absolute peak of ENB and are wondering if it's worthwhile to continue holding or cut your losses right?


Not, I'm just taking the stock as an example.

_When _you bought it certainly changes how you feel about it, but that's still 6 years at 0% CAGR at the moment. What is your trigger to decide that you should move on? Or buy more? Another way to ask this question : when you believe you are right and the market is wrong (buying opportunity) and when you do resign as you believe you are wrong and the market is right (selling a loss or bad performer)?


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## MrBlackhill (Jun 10, 2020)

bgc_fan said:


> Well that's nice you don't want to consider ACB, but otherwise, what you are calculating has no bearing in the real world. At the end of the day, you take the profits based on your proceeds, vs what you paid. The purchase timing may be nice to give you a IRR, but at the end of the day all that really matters is what profit.


From a discounted cashflow perspective, if you make $50,000 from investing $100,000 throughout 20 years, you are doing worse than if you make $50,000 from invest $100,000 throughout 5 years.

What do you prefer. Put $10,000 a year for 20 years to get to $1,000,000 or put $20,000 a year for 10 years to get to $1,000,000? In both cases, you invested $200,000 and you have $800,000 profits.


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## cainvest (May 1, 2013)

MrBlackhill said:


> Not, I'm just taking the stock as an example.
> 
> _When _you bought it certainly changes how you feel about it, but that's still 6 years at 0% CAGR at the moment. What is your trigger to decide that you should move on? Or buy more? Another way to ask this question : when you believe you are right and the market is wrong (buying opportunity) and when you do resign as you believe you are wrong and the market is right (selling a loss or bad performer)?


I mean in your example. 

Just a few factors ... 

fundamentals of the company
overall sector performance projections
better returns from other companies (money better used somewhere else?)


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## MrBlackhill (Jun 10, 2020)

agent99 said:


> Sort of like a leasing company. The new car they lease may cost them $40k. 4 years laterit is returned and they sell it for $20k. In the meantime, they collected $24k in lease payment. Did they make a gain or loss?


They've made a 3.39% return on investment. That's how I see it.


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## bgc_fan (Apr 5, 2009)

MrBlackhill said:


> From a discounted cashflow perspective, if you make $50,000 from investing $100,000 throughout 20 years, you are doing worse than if you make $50,000 from invest $100,000 throughout 5 years.
> 
> What do you prefer. Put $10,000 a year for 20 years to get to $1,000,000 or put $20,000 a year for 10 years to get to $1,000,000? In both cases, you invested $200,000 and you have $800,000 profits.


So there's a huge difference between your examples and the final example. In all the other ones, you're talking about a 10-year timeframe, and the last one you talk about a 4-year timeframe. The last example is a completely different situation. You're making the assumption that for the initial 6 years that you didn't buy that stock, and you've done something with that money. 

Basically, you're making nonsensical comparisons. As above, you've strayed from your whole OP, which is that at the end of the day you sold for X money. During the time that you've held the security, it has soared up and down, resulting in paper losses and gains throughout. That's a lot different than asking would you prefer making more money in less time.


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## MrBlackhill (Jun 10, 2020)

cainvest said:


> Just a few factors ...
> 
> fundamentals of the company
> overall sector performance projections
> better returns from other companies (money better used somewhere else?)


Well, you'll factor all this in, but at the end of the day, that's still _your _opinion against _the market_. So, no matter how much you like ENB, not matter how strong you believe that the market is wrong, what will be the trigger to change your opinion? In the case of ENB, that's 6 years at 0% CAGR. What if it becomes 10 years at 0% CAGR? 15 years at 0% CAGR?

What will it take to decide that you may be wrong about your belief of the future performance of the company based on your assessment of its fundamentals, projections, peers comparison, etc.?


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## MrBlackhill (Jun 10, 2020)

bgc_fan said:


> So there's a huge difference between your examples and the final example. In all the other ones, you're talking about a 10-year timeframe, and the last one you talk about a 4-year timeframe. The last example is a completely different situation. You're making the assumption that for the initial 6 years that you didn't buy that stock, and you've done something with that money.
> 
> Basically, you're making nonsensical comparisons. As above, you've strayed from your whole OP, which is that at the end of the day you sold for X money. During the time that you've held the security, it has soared up and down, resulting in paper losses and gains throughout. That's a lot different than asking would you prefer making more money in less time.


Yeah, maybe I want on two different comparisons, but at the end I have to combine them : 1) I see my stocks moving up and down over time, 2) I want to invest my cash flow.

In my OP, I have multiple examples. One is just a single buy & hold, but some of them are cash flows.

If I use my Enbridge example again. I'd ask myself two questions:

ENB went 0% CAGR for the past 6 years, what do I do with my current position? Hold or Sell?
ENB went 0% CAGR for the past 6 years, what do I do with my cash flow? Buy more ENB or buy something else?
And my question to you guys is how do you react to a loss (or a flat). And that depends on when do you start considering that you are losing money instead of investing for future profits. For the ENB example, your cashflow in 2015 made no profit, your cashflow in 2016 made little profits, your cashflow in 2017 made a loss, etc. When do you consider you are losing money (or making no money) on your strategy?


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## agent99 (Sep 11, 2013)

One other situation where using the ACB doesn't give a true picture (May not apply to you young guns)

I bought/buy stocks in my RRSP/RRIF. When time comes for compulsory withdrawal from RRIF, I withdraw stocks in-kind. I often bought same stock in Registered as unregistered. Lets say I paid $20 for 100 shares in both accounts. Over the years the stock increased in price to $50. acb before withdrawal was $20 (If I sold, a $30 gain). After withdrawal my acb is (20+50)/2 or $35. If I now sell all 200, my gain is now $3000 instead of $6000. 

Just another quirk that makes those brokerage average costs meaningless.


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## cainvest (May 1, 2013)

MrBlackhill said:


> Well, you'll factor all this in, but at the end of the day, that's still _your _opinion against _the market_. So, no matter how much you like ENB, not matter how strong you believe that the market is wrong, what will be the trigger to change your opinion? In the case of ENB, that's 6 years at 0% CAGR. What if it becomes 10 years at 0% CAGR? 15 years at 0% CAGR?
> 
> What will it take to decide that you may be wrong about your belief of the future performance of the company based on your assessment of its fundamentals, projections, peers comparison, etc.?


Of course it's just an opinion otherwise you'd be able to tell the future! 

Given your example I likely would have sold off ENB in mid-2017 based on the info I provided eariler.


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## agent99 (Sep 11, 2013)

MrBlackhill said:


> They've made a 3.39% return on investment. That's how I see it.


You didn't need to do that  That was my point. They made a capital loss, but an overall gain.

When determining gain or loss for your own satisfaction, taking income produced is another factor to consider.

I had income trusts that I bought and sold at almost the same price. Meanwhile for 15 years, they churned out double digit distributions. Some claimed they were a bad thing


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## bgc_fan (Apr 5, 2009)

MrBlackhill said:


> Yeah, maybe I want on two different comparisons, but at the end I have to combine them : 1) I see my stocks moving up and down over time, 2) I want to invest my cash flow.
> 
> In my OP, I have multiple examples. One is just a single buy & hold, but some of them are cash flows.
> 
> ...


I already answered that.


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## Bananatron (Jan 18, 2021)

Kind of ties in with the "you don't lose if you don't sell" train of thought for investing. If you wait 20 years for your dog investment to come back to your breakeven price, yeah you never lost the trade, but you did still lose money.


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## Rusty O'Toole (Feb 1, 2012)

If you sold a stock for more than you paid, you are a winner. Don't worry if you could have sold it for more - you can go nuts thinking that way. Reason, you are never going to buy at the absolute bottom and sell at the absolute top, anyone who claims to do so consistently is a liar. If you beat yourself up every time you sell a stock for less than the absolute top you will never get anywhere.
I am reminded of the story of Baron Rothschild who was asked at a dinner party if it wasn't very difficult to make money in the stock market. He replied " I have a simple method that never fails. I never buy at the bottom, and I always sell too soon. I find as long as I do that I can't help making money".


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## cainvest (May 1, 2013)

MrBlackhill said:


> When do you consider you are losing money (or making no money) on your strategy?


Are you looking for some type of pure calculation on when to decide to cut and run?


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## MrBlackhill (Jun 10, 2020)

cainvest said:


> Are you looking for some type of pure calculation on when to decide to cut and run?


No, just an explanation of each person's own strategy. Some may use calculations, some may have a predefined plan, some may just put a stop loss, some may reassess their expectations for each of their stocks on an quarterly basis, etc. 

To me, I don't really plan to cut my losses simply because a stock is falling. I have some level of confidence for each of my stocks which is reflected by how much % of my portfolio I'm comfortable for each. I will decide to sell a stock only if I'm more confident in another stock that could replace it. But then I'm not sure how I would react if the stock I'm the most confident starts underperforming.

Also, there's certainly something very deep going on the psychological side of investing when someone holds a stock that was a winner for many years until it goes otherwise.

Imagine putting a lump sum in Enbridge in 1996, then seeing it perform awesomely good for about 20 years... and then seeing it go flat for about 6 years. After so many years, there's certainly denial going on.


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## Rusty O'Toole (Feb 1, 2012)

Now you are talking about trading rather than investing. I use chart support levels myself. It is something of a judgement call, too tight and you get stopped out prematurely, too loose and you give back a big share of your profits. This works because I trade an ETF that is pretty consistent and does not have wild swings as a rule. My stops are usually on the tight side, like you I hate to lose money.


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## MrBlackhill (Jun 10, 2020)

Rusty O'Toole said:


> Now you are talking about trading rather than investing.


I believe that active investors must also have an exit strategy, not only traders.


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## cainvest (May 1, 2013)

MrBlackhill said:


> Imagine putting a lump sum in Enbridge in 1996, then seeing it perform awesomely good for about 20 years... and then seeing it go flat for about 6 years. After so many years, there's certainly denial going on.


Well that's the thing, companies change and should be reviewed if performance is less than desired. It really doesn't matter how long you've owned the stock, it's more "what has this stock done for you lately". For good divy producers you can at least turn off dividend reinvestment so the money can go elsewhere.


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## Plugging Along (Jan 3, 2011)

MrBlackhill said:


> And do you calculate it FIFO, LIFO, average cost, etc. when you sell?
> I'm not talking about tax implications, but how you see it.


From an accounting perspective, you use FIFO, LIFO or average cost depending on the nature of your business, how your want to represent your sales. There are pros and cons to each one, (I don't feel like reliving my accounting days). Essentially, method you choose has a purpose. What your purpose? And why?

For me, I care about taxes, so ACB it must be and at the end of the day, do I have more than I started with at the growth rate I want. Since I am invested long term, I decide to sell if I don't think selection will meet the goals initially intended or if there is a better choice. 

Every needs to use ACB


MrBlackhill said:


> From a discounted cashflow perspective, if you make $50,000 from investing $100,000 throughout 20 years, you are doing worse than if you make $50,000 from invest $100,000 throughout 5 years.
> 
> What do you prefer. Put $10,000 a year for 20 years to get to $1,000,000 or put $20,000 a year for 10 years to get to $1,000,000? In both cases, you invested $200,000 and you have $800,000 profits.


This example is irrelevent. Pick the same time frame and the same amount of investment. The one that gives you the most at the end of that time frame was the better approach. 



MrBlackhill said:


> Yeah, maybe I want on two different comparisons, but at the end I have to combine them : 1) I see my stocks moving up and down over time, 2) I want to invest my cash flow.
> 
> In my OP, I have multiple examples. One is just a single buy & hold, but some of them are cash flows.
> 
> ...


I don't care about cashflow at this time. So I really look at over all gains and what I think the stock will do. In all fairness, I am really bad at 'investing' and trying to go for the maximum gains. I have found the portfolio that I manage myself trying to time things and pick winners has been dismal. That's why I have my advisor help me on my larger portfolio. He does all my analysis, and makes recommendations for me. 



MrBlackhill said:


> I believe that active investors must also have an exit strategy, not only traders.


The strategy I use (with my advisor) is I have goals for all of my purchases, if they do not meet my expectations (low returns or negative returns), we evaluate why. If our reason for those expectations are wrong, and we don't think it will meet the expectation, I get rid of it, if we think it will still meet our expectations, I will hold, if the price right, I will buy more.


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## Spudd (Oct 11, 2011)

So, personally, I mostly invest passively and for those parts of my portfolio I let bygone be bygones. 

For the active part (just for my own entertainment, really), I aim for a 10% CAGR including dividends. If a stock is close to that 10% level, I calculate what price would drop it below that level and set a stop there. 

For Enbridge, I've held it for almost 3 years and my CAGR including divs is 12.1%. I only started doing the 10% thing a few months ago, and it's threatened to break through a few times. But so far it never has. It helps that I also have long-term faith in Enbridge as a company. Not like 20 years long term, because fossil fuels etc, but at least 5 years.


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