1. actively managed using derivatives?
2. slow to implement
3. You need to find other people with the same stock position
Not understanding the overall concept of how these things work.作者: susana 时间: 2011-7-11 19:31
I'll summarise my understanding here:
In order to have a completely diversified portfolio under the "completion portfolio" method
-- the low basis stock will slowly be liquidated
-- as liquidation will result in tax consequences, other assets will be necessary to offset the high profits -- essentially, you'll have to offset tax effects
-- liquidation will take time to achieve, so its slow
-- not sure whether it's actively managed -- the low basis is liquidated for a diversified
portfolio, so don't think its "actively managed" in the sense that the completion will have unsystematic risk exposures
-- you don't need other people for the same stock, that arises in a private exchange fund if I remember correctly作者: mik82 时间: 2011-7-11 19:31
Thank you, that helped alot steven. I think the actively mgmt part and other people for the same stock is for private exchange fund (vs. public)...i got confused.作者: nannan66 时间: 2011-7-11 19:31
Kwonyboy Wrote:
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> I don't believe that the low basis stock is
> required to be liquidated. I thought it works by
> utilising the investors other liquid assets to
> purchase other stocks to diversify the position of
> the low basis stock and also reinvest dividends
> into other stocks to gain further diversification.
> Thus the strategy is not really helpful for
> investors who don't have other liquid assets.
As losses are made in the completion portfolio you sell the illiquid holding and diversify it that is one of the keys.作者: former 时间: 2011-7-11 19:31
AMA Wrote:
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> IMO, the main purpose is diversification rather
> than loss harvesting. Am I right ?
Yes, but generally there is not enough money to diversify quickly so you must tax loss harvest over a long period of time. If he already had the money to be diversified from the start the concentrated position would not exist.
Edited 1 time(s). Last edit at Saturday, May 21, 2011 at 10:14PM by Paraguay.
