RYM - Ryman Healthcare

[couta1]

Hi People,Looking for thoughts on the recapitalization of profit concept I have done this with Rym before and see it as a good strategy to use on shares which are going to continue to rise over time, to clarify what I mean is selling shares for higher than purchase price then buying back at slightly lower price and you end up with more shares for same amount of money and profit is hidden in new additional shares, I see no tax implications here until you finally dispose of shares and take profit out(If you are a trader) Did this with PEB recently also but see risk if share price drops and never comes back up to your purchase price,not likely with retirement stock .

[Harvey Specter]

Hi People,Looking for thoughts on the recapitalization of profit concept I have done this with Rym before and see it as a good strategy to use on shares which are going to continue to rise over time, to clarify what I mean is selling shares for higher than purchase price then buying back at slightly lower price and you end up with more shares for same amount of money and profit is hidden in new additional shares, I see no tax implications here until you finally dispose of shares and take profit out(If you are a trader) Did this with PEB recently also but see risk if share price drops and never comes back up to your purchase price,not likely with retirement stock .

1. When you sell at a higher price, how do you know they will be avaliable at a lower price?
2. you are selling so depending on you intention etc, you may be subject to tax (in the IRD's eyes) when you sell at a higher price, even though you intend to buy at a lower price.

If you could pull this off with 100% certainty, you have struck investing nirvana. That's the sort of system you could sell on late night TV for $20k.

[born2invest]

Not $8, B2I, but through the downward trendline which has now been tested again at 775/780. Anything above that could be positive but if today it falls away and doesn't breach that line, I for one will not be buying.

It is just a squiggly line on a screen. Do you really believe that "resistance" and "breakthrough" levels are a way to rationally value what to pay for a share in a business?

Buying at a higher price than yesterday is often a good thing since it means that you are buying on the way up. What's more common and more natural psychologically (which is why it's too easy to lose money on trades) is to buy on the way down (i.e. at a cheaper price than yesterday). Supermarket shopping tactics don't work with Equities.

I'm sorry, but when has buying at a higher price better? If you want to maximise the return on investment, the lower price you pay, the higher the compounded return will be over time.

Supermarket shopping tactics defintely work with equities. It doesn't matter if you are buying socks or stocks, you should always aim to get the best value possible.

[Bobcat.]

I'm sorry, but when has buying at a higher price better? If you want to maximise the return on investment, the lower price you pay, the higher the compounded return will be over time.

Because of momentum. If momentum is upward then yes today's price may be more than yesterday's but it's also cheaper than tomorrow's.

Likewise, if the momentum is downward, today's price is cheaper than yesterday's, which looks a good time to buy but isn't since tomorrow's price is cheaper still.

Understanding and trading consistent with momentum is how to best make money in most markets. Trying to pick bottoms during downward price movements is not. Nor is trying to pick tops for selling, regardless of momentum. Momentum matters.

BC

[couta1]

Harvey Specter,Thanks for reply, from what I've obserbed retirement stock has runs and rests and its pretty much guaranteed if you sell near top you will buy back cheaper in a short space of time, I've seen this as a consistent pattern over the last couple of years, I guess if its a long term hold then you are just adding more shares so tax not an issue

[Harvey Specter]

Harvey Specter,Thanks for reply, from what I've obserbed retirement stock has runs and rests and its pretty much guaranteed if you sell near top you will buy back cheaper in a short space of time, I've seen this as a consistent pattern over the last couple of years, I guess if its a long term hold then you are just adding more shares so tax not an issue

I know some have had success with the likes of FBU which follows a very large, long cyclical cycle - up to $9ish, then down to $6ish then up then down etc. I am not sure if there is enough down with the villages, they are just a constant upward line with a few breathers in between.

[In4a$]

Hi People,Looking for thoughts on the recapitalization of profit concept I have done this with Rym before and see it as a good strategy to use on shares which are going to continue to rise over time, to clarify what I mean is selling shares for higher than purchase price then buying back at slightly lower price and you end up with more shares for same amount of money and profit is hidden in new additional shares, I see no tax implications here until you finally dispose of shares and take profit out(If you are a trader) Did this with PEB recently also but see risk if share price drops and never comes back up to your purchase price,not likely with retirement stock .

I have tried it over the years. Sell a few, 1000 or 2000 shares if price spikes, then buy back if takes a dip, been succefull at times but probably only 60% of the time, I often end up buying back at the same price or higher. The hardest part is picking the sell price, last time I tried with RYM, sold at $7.80 but price went to $8.00 so always feel missed out. Brought back at $7.55. Lowers my average buy which is good.

[Vaygor1]

The problem is a short term buy-sell strategy in less than a minimum 3 month hold period is effectively gambling. Market sentiment can short-term drive a share in any logical or illogical direction... and on top of that the buy-sell approach just feeds the brokers.

My take on the B2I - Bobcat debate here is you are both right.
If you're in it for the long term and base your buy price on fundamentals then be happy to buy on the way down and then buy more if the price drops further. If short term buy-sell trading is your thing then predicting short-term market sentiment is important and as Bobcat points out "The trend is your friend".

For me, I am a long termer. Pay a lot less brokerage, hands are clean from IRD deeming me a trader, and a less risky strategy... but with longer term results. My approach requires a great deal of patience but the results are more certain imho.

[Vaygor1]

Yes Couta. I read up large on your CNU dilemma in another thread somewhere... don't think it was the CNU thread though.
I don't hold/follow CNU but I am interested (now, with hindsight) to know if cutting your losses and selling CNU when you did was the right move. I can't remember what price you got out at compared to the price now sorry.

[couta1]

Vagor 1, I got out at 2.07 so if I was still holding would be sitting on an extra 68k paper loss than when I sold out so I think my decision was the right one with no clear path ahead for the stock,cheers