I don't understand how you can sell at a loss and have to claim a gain on taxes?? Something is wrong with the cost basis calc in that situation. Or the tax advisor.
If I buy a stock at $20 and 2 years later the price is $10, I have no loss unless I sell, which is a tax-related transaction that I must report. If I instead hang onto the stock, I have nothing to report to Uncle Sam. It may have less value than when I bought it, but it's not a loss until I sell. Maybe 2 years later the price is $40. I don't have a gain until I sell, it's meanwhile a holding with higher price than when I bought.
There is no true gain or loss until you sell. I do believe that. I don't use an advisor so didn't get that from one of those!
Dividends, however, are income, whether or not you reinvest them, and are taxable transactions. However, they are not a gain or loss, just income. I've owned Bob Evans for over 10 years and while I am up substantially, I've paid no taxes except on divs, and until I sell, there is no classification for the lots I own. It's not a gain, it's not a loss. It's simply A Holding.
When I do want to sell, I have some control over taking a gain vs loss because of all the little lots I bought over the years via dividends - high prices, low prices, maybe stock splits ... Figuring gain vs loss is quite a chore in the dividend-payer realm, but, assuming I don't sell the entire position, I can pick and choose specific lots to sell based on what I bought them at and can therefore control gain vs loss. Laborious but worth it to me.
I'm not sure what a "loser stock" is, unless you are referring to a badly run company with outstanding shares that will likely never appreciate? I don't use an advisor so can't tell you what the timeshare pitch is on companies with no viable future. "You can only buy today"?
There are, however, constant stock price fluctuations. For much of 2011, Caterpillar was my star. More recently, Diamond Foods was the star. Things change, prices move. I don't own any losers but I do own companies whose prices have periodically been depressed and maybe I'll miss the writign on the wall one day and have a company go under. I don't consider Cat a loser now that it isn't leading the pack for me. While I don't think this is what you meant, I'm just saying that I've not yet had a loser stock and am not sure what that would be by your definition. Tiny speculative business with narrow market, signficant barriers to entry and established competition with a better product and management? Or, temporary dip in stock price = loser? not to me.
The stock market runs on investor sentiment, not true company value. While many are fearful, I'm on a buying spree.
Investing is a personal thing. I go my own way and don't listen to current hype on winners and losers, DOW or S&P up or down... I pick my own companies based on my own criteria, do my own research, manage my own portfolio. I don't own businesses that I don't understand and will never buy on a "hot stock tip" or because someone else thinks I should. I have a long time horizon and I'm forging my own path. Time will tell if I've done well, but after 10 years at it, my holdings are worth much more than what I put in them. Not one loss!! But, not one gain, either ; )
