Consolidating losses

ANGLICANPAT

A lot is spoken about consolidating your losses if you pull out when the going is rough and your chosen fund down.
Pardon my ignorance, but if you have say a fund which is in a sector getting a ropey ride and has bombed, and you instead of selling , exchange it through a supermarket for a more productive fund (one would presume youd get a bottom of the barrel price for the one you sell, and would pay much more for the new productive one ) then doesn that still have the same effect of selling when the market is down? Havent you still consolidated the losses on the one that has done badly , and the new one could do an about turn as well if its sector has a bad run?

westy22

Once you sell you have crystallised your loss. As performance figures are historic, there is often a greater likelihood of a 'down' stock going up than an 'up' stock going up further. What you are outlining above is the classic investor mistake of selling low and buying high - it is what keeps fund managers in new Porsches!

Linton

ANGLICANPAT wrote: »

A lot is spoken about consolidating your losses if you pull out when the going is rough and your chosen fund down.
Pardon my ignorance, but if you have say a fund which is in a sector getting a ropey ride and has bombed, and you instead of selling , exchange it through a supermarket for a more productive fund (one would presume youd get a bottom of the barrel price for the one you sell, and would pay much more for the new productive one ) then doesn that still have the same effect of selling when the market is down? Havent you still consolidated the losses on the one that has done badly , and the new one could do an about turn as well if its sector has a bad run?

Where is a lot spoken about consolidating your losses?? I have never heard the expression before.

Generally it is a seriously bad idea to sell when a fund you hold is down. Why?

1) You are guaranteeing a loss.
2) How do you know the fund you are moving into is going to do any better?
3) moving funds costs money

Investing in funds is for the long term: 5-10 years at least. Chose funds that invest in sectors that you believe have a long term future. There will be ups and downs, accept this. If you want to sell, sell when the price is high. Use periods when the fund is cheap to buy some more.

Eco_Miser

ANGLICANPAT wrote: »

Pardon my ignorance, but if you have say a fund which is in a sector getting a ropey ride and has bombed, and you instead of selling , exchange it through a supermarket for a more productive fund

That is selling the poor fund and buying a better one, and therefore crystallising your loss.