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Cedar Rapids Gazette (Newspaper) - December 17, 1974, Cedar Rapids, Iowa SHULSKY 4 The Cedar Rapids Gazette: Tues., Dec. 17, 1974 SXXSXXSSSSXXSSXSSXSStt^^ "|* he Investors Quid© tSttBOOtxssxsssxsxsxssss^ By Sam Shalsky There is still time left in 1974 in which to decide whether you arc going to have Uncle Sam share some of the stock market losses which have been so plentiful this year. Uncle Sam’s share of your losses, of course, will depend upon your income tax bracket. It is by using these losses to reduce your tax bill — the one due next April 15 — that you can shift some of the loss to Washington. I’m a firm believer in doing so, and therefore want to devote a couple of columns to the idea of “‘making the best of a bad bargain.” I appreciate that taking securities losses always involves acute distress. But it is a fact of investment life — and there is no way to sweep it under the rug. The novice investor generally shields himself from this unpleasant fact by arguing that since he still holds the stock he bought 20 points higher, he has sustained no loss (“It’s only a paper loss.’’) That’s being as realistic as a bald man. carrying a picture of his high school head of hair, going into the barbership for a shampoo. It just “ain’t there any more ” If you bought IOO shares at 35 and the stock is now selling at 20. you are NOW out $1,500 plus commissions, and no amount of wishful thinking can disguise that fact. The loss may be in a stock you should have never bought in the first place. Or it may be in a stock which once made sense but no longer suits your investment needs. Or it may even be a stock you’d like to continue owning, and should. It seems to me there is little argument about taking such losses in time to reduce your income tax bill. By “in time.” of course, is meant a sale anytime before the close of the stock market on Dec. 31. And a sale it must be. Far too many investors think if they can continue to hold shares which have fallen in price and still claim a tax loss. Not so. You may have bought stock in a “pie-in-the-sky’’ nursing home, or restaurant or leisure products company when you felt you could afford to take the risk And it didn’t work out. Now is the time to face that fact. Not only can the year-end tax loss maneuver help you reduce the income tax bite but it can serve as a period of much-needed portfolio review, prompted by the fact that if admitting one’s mistakes is in itself a virtue, the good to be derived can also spill over in to an actual cash savings Of course, the loss may be in an investment grade stock which did suit your needs when you bought it and. as a matter of fact, still does Many fine motor, utility, oil stocks, for example, remain investment grade, still pay generous dividends, even at lower market prices. Even so, if the tax loss can be helpful, consideration should be given to taking that loss now even if you intend to (and, perhaps, should) repurchase the stock after the required 31-day waiting interval. Or if, in order to retain an uninterrupted investment, you buy an additional amount of the stock now and sell the shares on which you have a loss 31 days later — BUT before Dec. 31. (This maneuver will be discussed Wednesday ) The main point to be made here is that NOW is the time for a candid review of the loss securities you hold. Try to be honest with yourself in answering: Was this stock a mistake in the first place? What really are its chances of ever coming back? Even if I still like the stock and am hopeful, shouldn't I take the tax loss by either buying more stock now and selling out the original block after 31 days — or selling now and buying back after 31 days? Has my investment position changed (now retired, in need of current income) so that this stock no longer belongs in my portfolio even though it may recover, in price in the 1980s? It is a custom to adopt constructive resolutions for the New Year In investing, it is almost obligatory to take a long, hard, realistic look at your portfolio losses now — before the year-end — in time to recoup some of the money the stock market has taken away from you in recent months and years Wednesday: How to figs re tax losses on securities Mr SSuiiky welcome* written question* but be will be able to provide answers only tbrou«b the column For information on please Include he Gazette WIN AT BRIDGE 17 South INT 2d By Oswald It James Jacoby There are two ways to handle bad breaks One is to let them beat you; the other is to guard against them. Frequently you can take care of the matter by paying attention at trick one. You cover West’s jack of diamonds with the queen. People have been known to lead away from lungs; but this time East produces the king If NORTH (DI    17 A K2 V K 9 7 2 ♦ Q 7 ♦ A J 10 5 4 WEST    EAST 4 10654    4    A Q8 3 ? 6 4    ?    IO 5 ♦ J 1094 3    4    K 8 5 2 483    4    K72 SOL TH 4 J 97 4 A Q J 8 3 ♦ A8 4 Q96 East-West vulnerable West    North    Eau!    South 14    Pass    Id Pass    2d    Pass    4d I Pass    Pass    Pass Opening lead —J ♦ The bidding has been West    North    East ie Pass    Id    Pass Pass    34    Pass    ? You. South, hold *43dAQ 10 86dKJ4 4AQ3 What do you do now? A—Bid four clubs. Your partner appears to be starting a slam try in clubs TODAY ti QUESTION He continues to four spades What do you do now9 Answer Tomorrow you are careless, you take your ace right away Later on you lose the club finesse, East puts his partner in with a diamond and West leads a spade You think, but thought does you no good East holds both the ace and queen and you wind up one in the soup Now look how pleasant life is if you do a little thinking at trick one. You note that the king of diamonds has shown up in the wrong hand It is possible that the same wrong hand holds the aee-queen of spades and king of clubs Now you let East hold that first trick. He can do anything he wants at this point. The same goes for later on when he takes his king of clubs, but whatever he does he will be helpless to put West on lead. Now you will lose just one spade, not two. SHOP MONDAY TH KH FRIDAY 9:30 'til 9:00. SVU HIU! 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