Forum Archive Index - September 2000

["Peter Maiden" <pmaiden@today.com.au>]

Another slant (and most likely confuse the issue even more) on the rather 
negative subject of when is a loss a loss?

I always think of the future and all decisions (whether they relate to the 
buying and selling of shares or trying to help the business that hopefully gets 
some returns for employing me) should be looked at in this light.

Basically all past costs should be treated as a 'sunk cost' and not be included 
in any thinking as to what the benefits that can be derived from a new (future) 
investment. In a round about way that is saying one needs to acknowledge any 
losses at that time.

The decision making process for future investments only takes into account what 
one thinks the gains will be made and acts accordingly. Trying to build in any 
factors for past losses etc only clouds the decision making process - and 
generally leads to a decision that misses opportunities to make money.



However if one needs to fund future investment by selling some existing holding 
of shares or whatever at a loss then the 'acknowledged' losses become 
real(alised) losses.

Good luck

Peter

PS forget the IRD and only think about them once a year when you try to sort 
them out. Most likely reading all these posts anyway and looking through their 
records?




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