Author Topic: special situation vs liquidating long term portfolio?  (Read 1625 times)

scorpioncapital

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special situation vs liquidating long term portfolio?
« on: June 16, 2018, 11:31:38 PM »
Unlike the big capital firms, regular individual investors may be capital constrained.
Suppose you see a special situation with a 20% return in very short-time but you must liquidate a large part of your long-term portfolio with unrealized gains to take advantage. Would you do it?



John Hjorth

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Re: special situation vs liquidating long term portfolio?
« Reply #1 on: June 17, 2018, 12:20:10 AM »
Joel has written a nice essay about it.
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

scorpioncapital

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Re: special situation vs liquidating long term portfolio?
« Reply #2 on: June 17, 2018, 12:45:43 AM »
Thank you!

given2invest

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Re: special situation vs liquidating long term portfolio?
« Reply #3 on: June 17, 2018, 08:09:24 AM »
Unlike the big capital firms, regular individual investors may be capital constrained.
Suppose you see a special situation with a 20% return in very short-time but you must liquidate a large part of your long-term portfolio with unrealized gains to take advantage. Would you do it?

use margin

scorpioncapital

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Re: special situation vs liquidating long term portfolio?
« Reply #4 on: June 17, 2018, 10:50:58 AM »
Yeah I would...but this special situation is unmarginable (pink sheets).

wabuffo

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Re: special situation vs liquidating long term portfolio?
« Reply #5 on: June 17, 2018, 11:09:17 AM »
Quote
Yeah I would...but this special situation is unmarginable (pink sheets).

Assuming the rest of your portfolio has marginable securities and this purchase would be a small percentage of the portfolio ... you could still use margin if you wanted to, no? 

Assuming, you don't want to sell something else, of course.
 
wabuffo
« Last Edit: June 17, 2018, 11:11:20 AM by wabuffo »

scorpioncapital

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Re: special situation vs liquidating long term portfolio?
« Reply #6 on: June 17, 2018, 11:21:44 AM »
Possibly..but it would be too much...The question is pretty much what are the odds that the portfolio zooms up 20% in 2 months. I would say very low....but there is also the having to take capital gains. If I was living in a country with no capital gains tax it would be a far easier calculation.

sleepydragon

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Re: special situation vs liquidating long term portfolio?
« Reply #7 on: June 17, 2018, 11:27:03 AM »
Looking back, if I have just bought all the stock that I have sold, I would have massively outperformed myself. In fact, I would have fully retired years ago :)

cameronfen

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Re: special situation vs liquidating long term portfolio?
« Reply #8 on: June 17, 2018, 11:45:47 AM »
Looking back, if I have just bought all the stock that I have sold, I would have massively outperformed myself. In fact, I would have fully retired years ago :)

this is certainly true for me too. 
The general sentiment.  Im too you to young to retire even if I made lots of money. 

bizaro86

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Re: special situation vs liquidating long term portfolio?
« Reply #9 on: June 17, 2018, 12:46:58 PM »
Depending on the rest of your portfolio, you could sell some and replace the exposure with short term options. That doesn't cover your tax issue, but does help with short term leverage. Do you have any loses you could swap out for offsetting losses?

On an unrelated note, once you have your position would you mind sharing the special situation? Even if only after it closes as a case study.