A little late to be getting out at this point. I'm not near retirement so I'll just be buying at really low prices in my 401k and turn out better off in the long run...assuming this country doesn't disintegrate. lol. To get out now is to realize actual losses. People close to retirement may be getting out now...but they are realizing those losses now as well. I'm staying put. Down with the ship...until it floats again. I just need my pirate hat and I'm all set. In fact, I'm thinking about buying some stock at these prices. Seems like a better bet than playing the lottery. We know there will be a bounce back up. Just a question of when does it bottom out and when to get in. Now doesn't seem like a bad time to invest in a few of these pummeled stocks.
This idea that losses aren't actual losses until you sell is a bit misguided. If you bought something at $100 and it drops to $50, you now have $50 in assets, whether or not you sell it or not. The decision going forward is, if you had $50 cash today, what is the best option for it? If you believe it's to own cash, you should sell. If it's to own whatever it is you own, you should hold. If it's to own something else, you should sell and buy the new thing. What happened in the past is irrelevant. The only place that realizing gains/losses matters is for tax purposes. But assuming you have net losses for the yet, it really is not a deciding factor in what to do going forward.
Anyone holding on to major chunk of their portfolio at this point should have considered hedging their investments. I know some will bounce back and I am nibbling at some stuff like certain Financials, Utilities, and proven energy stocks for a long position but everyone needed to convert all the down using a balanced system of scaling certain portions of their portfolio.
That is an important point that a lot of people miss. You really should ignore your cost basis in making decisions except for important tax reasons. Some people should think about tax loss harvesting right now. It could benefit you this year and in future years.
Can somebody clarify for me how you can carry forward cap gains losses from year to year? I don't know anything about this?
its not panic. banks will not lend to businesses. businesses have a bunch of debt on their books. you think its bad now, wait till the christmas shopping season fizzles.
agreed. it's not about value...it's about nobody's buying. there's no buyers in the market because they're all waiting to gauge impact of credit crunch. fear on top of fear. cue FDR.
You only can count $3000 of losses in one year. So let's say: Yr 1: Cap gains of $10,000 Yr 2: Cap losses of $20,000 Yr 3: Cap gains of $5,000 In yr 1, you'd pay taxes on $10,000 in gains. In Yr 2, you'd have a $3,000 deduction. In Yr 3, you'd have a $3,000 deduction. Going into Yr 4, you'd still have $9,000 in Cap Losses to offset any gains. The tax rates and stuff change based on long and short term gains, but if you don't have gains, that part doen't really matter.
Is there a time limit on this stuff or if I lose 30k can I claim 3k losses for the next 10 years?....errrr...my friend wants to know.....
No time limit, unless the laws ever change. That said, I think a great way to stimulate the economy is to allow people to take $10 or $15k in losses next year. It's a 1-year tax cut that gives people capital - but it's made up in the long-run so there's no real cost to the government except for time-value of money, similar to the increased Sec 179 deduction idea (which is a fantastic idea) from 2001 or 2003 or whenever it was.
