I tried reading some finance blogs but I think I must be missing the actual purpose of CGH. If you bought 100 stocks at $5 (cost $500), sold them at $10 (profit $500), and then bought them all back (cost $1000), doesn’t that put you at a net loss of $1000? I saw something about a cost basis? But even if you earn money in the future, won’t it be offset by the fact you had to spend $1000 to buy back your stocks?
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Long story short, if you sell and buy back, you lock in those gains and losses. Where as if you are holding a position for 10 years and it increases by 1mil, you don’t have to report that income until you sell it.
Cost basis is just where you “start” a position. That way you can calculate your gains and losses when you sell.
Also if you own stock, you own equity. So even if you spend 1k on stocks, you are still net even. Unless your asset goes up or down in value.
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