For all you high volume traders I have a question: what do you do when it comes to managing your taxes on these deals? Anything less than 1yr ownership leads to earned income rates right? Is your earned income just so low that it doesn't phase you much? Are you day traders who derive your income exclusively from the market? Or is the tax rate something you just deal with and don't talk about? There's a quote from Ben Graham's book that I'm paraphrasing that goes, "It sucks and feels like you're paying the devil, but it sure beats losing all your gains just because you want to hold onto it longer." Knowing when to sell seems like just as hard a proposition as knowing when to buy.
It is capital gains not earned income. Technically, I have no earned income which sucks when you try to get a loan or prove income. If it is held for less than a year then it just short term capital gains which is taxed at your regular income tax rate.
So basically, if you are earning a comfortable amount (>$100k/yr) from your investments alone, then your tax rate difference in short-term vs long-term capital gains is going to be substantial. Meaning, if you have a stock that you've held onto for 9mo then you have a significant incentive to get it over that 1yr benchmark because you might be paying in the range of 10-15% less taxes. But I guess a lot of you never hold onto stocks for 9mo so it's a moot point. When I first started in September I panic-sold a few stocks at a loss because I realized the company I initially bought was no good. In a way that was the cost of the education, because it got me interested. Now I know much better how to pick a good company, and the past 3mo have been my foray into learning how to pick a good entry point. I've gotten better with each purchase, but I have not yet sold any of them. I'm 29 though and going to derive all of my income from my regular job. It's a learning process but at least I'm above the S&P so far (if I were to sell everything today, again an issue because I still have not sold for a profit in my life yet). Any tips will be helpful; my next book to read will be the CFA/Forbes investment guide.
One thing to keep in mind is that losses can cancel out the more expensive short-term capital gains. So if you lose $5000 on a stock, you can sell up to $5000 worth of gains without worrying about holding to a year - so that's useful in the case of a stock you might own for 9-10 months and you're debating selling. Regardless of whether you wait another 2 months or not, your gains will be cancelled out by the losses (assuming you have no other positions that you've sold). It doesn't sound like you mess with options, but ultimately if taxes matter to you, options are a way to protect yourself a little when you're near that edge at 10-11 months and want to sell. Instead of selling the stock, you can sell a call option or buy a put option to protect yourself in different ways if the stock goes down during the month or two you are waiting before selling. As a general rule to answer your original question, taxes matter a lot and should absolutely be considered in investing decisions - especially if you're in higher tax brackets. ST gains can be taxed at over 40% if you're in the top bracket + the Obamacare levy. It's a bit less important at lower tax brackets, but still matters. It doesn't sound like you mess with optinos
You guys still hanging onto DANG? It's come down a bit. I'm sure the fake cosmetics story doesn't help. I also got in GTAT around $5 and sold some around $18 but am still holding onto most of it for now.
looks like it has been doing well. any news driving it or just penny stock speculation? i've been looking for an oil and gas stock ever since i jumped out of KWK before it sold off some assets and got hammered
Ouch. No, there's substance here...along with the buying and selling patterns to support it. They have improved earnings to go along with their expansion... and they have the wells...right place, right time. Of course, there is the natural gas market .....After some pullback from the perfect storm, it's time to move again... Give it a thorough physical.... I'm curious to see what you think fallenphoenix as I usually rotate sectors looking at market forces/buying & selling patterns among other things. The fundamentals reveal themselves in the roadmap....many ways to skin that cat, eh?
I'm still long DANG. In fact, I added to my position on the dips. Nothing but consolidation after a huge run up.
Neighbor/Family friend of ours used to be the finance VP of MHR. When I was a freshman in college, he offered to let me sit in on a call. He went through some health issues so he had to walk away... I actually asked him how the company was doing a couple months back but he didn't have too much to say. Just thought it was interesting it's being talked about in here. Cool story bro.
Hopefully your family friend is doing better. That said, I find it interesting he didn't have much to say about it as it was having a big run up at the time.... quite a bit going on. Again, with the aforementioned NG market and oil likely hugging/headed North of 100..... ..looking forward to fallenphoenix's report.
Do y'all think we're headed for a correction or recession? The market seems stagnant. Looking at things from a big picture, though, I just don't see any way that there can be this doomsday that people are currently pining about. As much as the growth of the world's economy might be slowing, it is still growing, and there won't be a financial crisis this time around to inject system-wide fear into investors. People are earning money, and they'll have to put it somewhere. The market is still better than most places. People just appear to be...waiting, for something.
There will definitely be a correction IMO. We've been in a pretty strong upward channel since the end of 2010, and are up from the S&P lows of below 700 in early 2008. In the last few weeks, there have been a few mini sell-offs from international pressures (even today), but the market seems to recover. Timing the market is a dangerous game, so I intend to keep riding the trend, but hedging my plays. The market will inevitably correct at some point...who's to say when. But when it starts to turn, I'd be ready to take profits and go short, especially because the market falls much faster than it rises.
