Is it time to liquidate your investments?

[BandB]

We answered the question for us. Wednesday afternoon we sold 50% of every stock and mutual fund we held. No more, no less, except Walgreens, dumped all of it. Just saw things dropping significantly. At least they did today, but what tomorrow holds, who knows. DJ dropped 7%. We saved 2.5% drop today on half our investment. Broke even on the withdrawn half. So just lost 1.2%. I just don't understand why the market is as high as it is.

 

[BruceK]

Interesting prudent compromise. Our share prices are inexplicably high too, though they followed yours down yesterday.
I think 2 reasons: people stuck at home, day trading due to boredom, and, belief in a V shaped recovery. Wasn`t there a V shape recovery in 1929, just before...

 

[JLD]

I'll confess that I don't understand why the market is as high as it is either?

Seems to me that there are a lot of stock prices based on what I can sell them in the short term without any consideration of the actual value of the company.

As an example, Polaris Industries. Polaris is an American manufacturer of motorcycles, snowmobiles, ATV, and neighborhood electric vehicles. We don't have any stock, but my daughter has been following it as we own 3 UTV's made by Polaris. There stock was $102 (Jan 2), $92 (Mar 4), $39 (Apr 3), and $102 (June 8). This is just crazy.

Jim

 

[GFC]

I'm sitting tight.

 

[menzies]

I'm sitting tight.

Yep, cash doesn't make money.

 

[BandB]

I'll confess that I don't understand why the market is as high as it is either?

Seems to me that there are a lot of stock prices based on what I can sell them in the short term without any consideration of the actual value of the company.

As an example, Polaris Industries. Polaris is an American manufacturer of motorcycles, snowmobiles, ATV, and neighborhood electric vehicles. We don't have any stock, but my daughter has been following it as we own 3 UTV's made by Polaris. There stock was $102 (Jan 2), $92 (Mar 4), $39 (Apr 3), and $102 (June 8). This is just crazy.

Jim

I can almost understand Polaris. They shut down the fishing boat business they acquired. Pontoon boat business looks good. Then on May 29, they were awarded a 7 year contract for $109 million to build a vehicle for US special operations. They've been profitable.

 

[FF]

"Yep, cash doesn't make money."


True, but if the market deflates as some predict , 1/2 or more wont depart overnight.

 

[GFC]

True, but if the market deflates as some predict , 1/2 or more wont depart overnight.

OK, here's a hypothetical question that we already know the answer to:
Does that money really depart when the market goes down?

if you need to have immediate access to that money then maybe that money did depart, but if you need immediate access to the money you probably should not be in the market.

If you don't need ready access to the money and the market goes down the money doesn't really disappear unless you get scared and pull the trigger when it's down or falling.

 

[Rebel112r]

It certainly did disappear when I owned Nortel! Paper losses are paper losses, but may we’ll be real losses. I would say most are back where they were after recent sell off. I sold and bought back in and am slightly ahead of the game minus the tax liability.

 

[BandB]

It certainly did disappear when I owned Nortel! Paper losses are paper losses, but may we’ll be real losses. I would say most are back where they were after recent sell off. I sold and bought back in and am slightly ahead of the game minus the tax liability.

But one can't ignore the tax liability. We sold a bunch and we could buy back in but after taxes we have 20% less to do so with. On the other hand we've now covered the taxes on the gains what we sold had from 2012 to 2020.

 

[KnotYet]

"Yep, cash doesn't make money."

True, but if the market deflates as some predict , 1/2 or more wont depart overnight.

The average of market values over almost any 5 or more year period has increased.
If you can wait that long (or sometimes a bit longer) then the average will recover.

 

[Rebel112r]

Of course the new stuff for now, would be taxed as regular income?. Short term stuff usually bought in tax free acts, but no way in there to write off losses. Just have to play the game.

 

[O C Diver]

One of the things I have been doing last year and this is rebalancing my portfolio and paying capital gains. While much of my portfolio will be for my kids to deal with, I prefer to have it balanced to reduce risk. In doing this, one generates long term capital gains. While no one likes to pay taxes, IMO, capital gains will never be this low again in my lifetime. Should there be a chance of the Presidency and the Senate flips, I see capital gains tax rates going up atleast 50% and maybe doubling tied to personal income level. While I don't like paying taxes, I'd rather do the rebalancing now near 20% than maybe closer to 40% in a couple of years.

Ted

 

[BandB]

One of the things I have been doing last year and this is rebalancing my portfolio and paying capital gains. While much of my portfolio will be for my kids to deal with, I prefer to have it balanced to reduce risk. In doing this, one generates long term capital gains. While no one likes to pay taxes, IMO, capital gains will never be this low again in my lifetime. Should there be a chance of the Presidency and the Senate flips, I see capital gains tax rates going up atleast 50% and maybe doubling tied to personal income level. While I don't like paying taxes, I'd rather do the rebalancing now near 20% than maybe closer to 40% in a couple of years.

Ted

Don't disagree with you and that was part of our reasoning, to at least take care of the taxes on 50% of our holdings. The reality is that the Pandemic is ultimately going to have to be paid for. I don't think that will start until it's beyond us, but I could definitely see some tax increases in 2022, if not in 2021. When we do reinvest, it will be after tax money, at least, while what's already in there has a significant amount on which taxes haven't been paid. In fact, well over half of our market value has taxes to be paid on it still.

 

[menzies]

You guys need to remember that this tax money you haven't paid yet is government money that you are allowed to invest for gain you get to keep.. You need to be confident that paying that tax now and removing it from your portfolio doesn't result in missing out on gains that would be bigger than any increased future taxes.

 

[O C Diver]

You guys need to remember that this tax money you haven't paid yet is government money that you are allowed to invest for gain you get to keep.. You need to be confident that paying that tax now and removing it from your portfolio doesn't result in missing out on gains that would be bigger than any increased future taxes.

Tax money won't be paid till April 15th. It can certainly be reinvested till then.

If the Presidency and Senate flip, there is a very good chance that many will harvest gains in this year to avoid tax increases next tax year. Further, many may feel the new government won't be as pro business as the current administration. If that happens, you could see a 25+% decline in the market as investors seek safe havens.

To me, this move is insurance. I'd rather pay 20% now on a fully valued market, than possibly pay 30 to 40% on a market that may have lost 25% of its value. This isn't about getting out. When the world was selling in mid March, I was buying.

Ted

 

[Rebel112r]

It is wise to pay your capital gains tax at the end of the quarter you receive it. Waiting till April 15, you may incur a penalty. If you take gains thru out the year, IRS wants their share quarterly.

 

[BandB]

You guys need to remember that this tax money you haven't paid yet is government money that you are allowed to invest for gain you get to keep.. You need to be confident that paying that tax now and removing it from your portfolio doesn't result in missing out on gains that would be bigger than any increased future taxes.

I'm not confident in anything. Hence, I kept half in and pulled half out.

I do feel strongly the market will drop.

I don't think there will be tax increases in 2020 or 2021, but I do feel there will be in 2022.

 

[Bacchus]

It is wise to pay your capital gains tax at the end of the quarter you receive it. Waiting till April 15, you may incur a penalty. If you take gains thru out the year, IRS wants their share quarterly.

There are exclusions that avoid the penalty and need to consider and comply with those. AFAIK if you pay in at least as much as you did last year - no penalty.
Helps with the one time special events.

 

[O C Diver]

There are exclusions that avoid the penalty and need to consider and comply with those. AFAIK if you pay in at least as much as you did last year - no penalty.
Helps with the one time special events.

That's what I have an accountant / tax guy for. He tells me what to send in as quarterly payments to avoid penalties.

Ted

 

[Bacchus]

That's what I have an accountant / tax guy for. He tells me what to send in as quarterly payments to avoid penalties.

Ted

Agree... mine even takes care of it for me!

 

[Group9]

That's what I have an accountant / tax guy for. He tells me what to send in as quarterly payments to avoid penalties.

Ted

Yep, I used to get all of tax advice from random internet posters, but now, I go with what my CPA tells me to do!

 

[BruceK]

I'm not confident in anything. Hence, I kept half in and pulled half out.
I do feel strongly the market will drop. .

Probably right, seems artificially high. Why were people leaping into Hertz, at up to $5, when creditor payments probably leave zip for stock holders? I don`t get that.

 

[firehoser75]

Yep, I used to get all of tax advice from random internet posters, but now, I go with what my CPA tells me to do!

Why wouldn't you follow my investment advise. I only charge half of all invested!
I agree with several of the opinions stating that the market seems unnaturally inflated, probably due to the vast investment of "new" money by the US Fed! I don't trust the market going up when many businesses are suffering or going under, unemployment is way up, etc. ! It does not "feel" right, so I transferred all of my mutual funds to GIC's. I know, not any chance of making money there, but at least I should maintain. We will see how things progress, and I can always get back in, so all I am risking is a better short term return.
Personally, more security is better than less (right now).
JMHO, and remember, I only charge half.

 

[menzies]

Sunday Dow futures down 1K.

Tomorrow might be interesting.

 

[Rebel112r]

Menzies, I was surprised by your post. When I went to bed checked futures and it was showing a 200 point drop. Looks like that panned out, market about even at 11:30E. May well make a buck before day ends.

 

[GFC]

I'm up just a tiny bit at 10:15 PST. I'll take that over a drop of any kind, any day.

 

[soin2la]

No activity in this thread for 6 weeks, so just wondering what everyone's position is now.

I've sat on my hands and not regretted it.

Was your Ouija board right 6 weeks ago?

 

[captmikem]

I am a day trader and this is a great market for making money.


The dollar is strong though so Gold has been pretty steady.

Lots of cheap good companies out there... you can buy January calls on AAL, CCL, DAL, RCL etc.. just a small recovery will make you money.



M

Soin2la,
here you go:

I posted the above on 5/1, here are today's prices..

Gold 5/1 was $1,707 today $1,952

GOLD (Barrick gold corp) 5/1 was $26.02 today $30.36
AAL 5/1 was $10.94 Today $13.15
CCL 5/1 was $13.50 today $18.21
DAL 5/1 was $20.53 today $32.20
RCL 5/1 was $42.60 today $71.76

and it is only September...

M

 

[KnotYet]

The recent tech run-up and Tesla/Apple splits have been good for the boat budget.
Finger hovering over 'sell', of course.