Author: William Deshurko, 401 Advisor
Model: Equity Opportunity
Disclosure: Long VMW
Our core Equity Opportunity portfolio is an example of what happens when you start something in the middle, as opposed to beginning with a fresh start. This has been an active portfolio at my practice for a couple of years, with very good results (otherwise I would not have added it to our Covestor model list).
The trouble is, being an existing portfolio, we have some significant paper gains that would cause a tax consequence if we sell some of the current holdings. So instead of selling at the first sign of trouble, we’ve held on to several holdings while they have somewhat stagnated into trading ranges.
A good example of this is VMWare (NYSE: VMW), which had a great run in 2010, but is off to an awful start in 2011.
This brings me back to one of my golden rules of trading: don’t buy or sell based on tax reasons. Buy or sell based on fundamentals or technicals.
So after a full review, we’ll be making changes as we find securities that offer a good value in the current environment. We hope to produce a performance rebound after we reposition our holdings during the month of April.
