selling loosers and buying them back

[scienceguy2]

I am trying to come up with a downside to my stock proposal. I have a couple stocks that are big loosers. I beleive they will be good in the future but I got in at a bad time. I have dollar cost averaged it down somewhat.

I would like to sell my loosers, then after 30 days buy them back. I do not know the tax consequences from thsi action. I stayed away for 30 days so it would not be a wash sale so I can take the loss on taxes. Since the price is much lower I can buy back more stock than I currently own and get a great gain back when the stock does increase. Basically, I loose 50% of my investment but can gain 100% or more since the price is lower.

[Stocktrading101]

I think you answered your own question here. If you sell the shares and buy them back cheaper then yes you can make money off of them if the stock returns upwards.

On the flip side you could sell and the stock goes up even more and right after you buy back the stock tanks.

Thus really your strategy is relevant only to the time of purchase. Either way you do it when you buy or sell the stock you are betting its price is going to go one way or the other.

Regarding taxes any stock sold within a year is subject to regular capital gains tax which is your normal tax bracket. Any stocks sold after a year are subject to long term capital gains tax which I believe is either 10 or 15% I don't recall which.

Hope that helps!