Comments on: Know Thyself: Short-term vs. Long-term

by: Monday Reading and Stock Update on InvestorGeeks

Mon, 30 Jan 2006 16:28:29 +0000

[…] SIRI First some history. I had said before that my plan with SIRI was to unload the shares after the new year. But the sell off came sooner than I had planned. Soon after topping out at $8 the first major analyst downgrade occurred plunging the stock to about $6.50, where it hovered for most of January. Sadly, I wasn’t able to lock in my profits before the slip. At $6.50 I sold half my position, expecting more analysts to jump on the bandwagon. A few downgrades and $0.60 later, the stock is trading below $6. […]

by: Chris

Wed, 09 Nov 2005 03:18:34 +0000

Frank, my boy, are you planning on posting losses? ^o^;

by: frank

Wed, 09 Nov 2005 01:32:27 +0000

True, but you can sell any stock that has posted a loss over the year, and claim that to offset your gains. As long as you don’t buy the stock back for 30 days you’re good.

There are two strategies to this, both are pretty simple:

1. Sell shares of losing stock (i.e. Wal-Mart) buy shares in competitor (Target).
2.Buy enough shares to “cover” your current position in a stock. And sell the older, losing shares. The only catch is that the purchase must be made 31 days prior to the sale of hte losing shares.

by: Chris

Fri, 04 Nov 2005 17:04:16 +0000

It’s important for “Traders” not to forget about their costs when estimating ROI in the short-term. When selling short your tax burden is actually higher than long-term sales. For sales of stock held for one year or less, the profit is calculated at the ordinary income rate which can be as high as 35%, but when selling stock held over a year, the tax rate will fall to the 15% capital gains rate. For more information, see this SmartMoney article.

Plus, don’t forget about brokers fees, which can really add up depending on how much trading you do and how large (or small) the transaction is.

One final note. When trading real estate investments, the IRS allows for a Section 1031 deferrerd capital gains trade for like-kind properties. This means there is no tax on the sale if the next property is purchased shortly afterwards. There is no such thing for trading securities.