other than for annual living expenses?
I’m only thinking about selling a little bit to refill my cash bucket used for living expenses.
I have, in the sense that I’ve begun unwinding significant leverage (DITM, long dated call options). Started the leverage around 2019, increased the leverage in March 2020 and forward. My allocation to BRK also increased significantly. I’m winding down to a basic holding the stock outright position, and reducing my allocation (it’s still 4x my next biggest position, mind you). Also holding a pinch of cash now for the first time in a while.
The short of it is that I’m skeptical that forward returns from here will be above average, and I’d like to have the capacity to bet big again if that changes. In the interim a holding pattern will do.
Peak book per reported share is currently around 1.48+. That will sure come down in February, but due to AAPL gains that I view as more price action than change in the value of the business. Even if one assumes Book of $230 as “fair Book”, and you’re still at 1.36+ book / share – higher than median the last few years (and at least since the change in repurchasing policy).
Not making a macro call, but looking at the 5 year CAGR for the broader market, and the runup more generally, also has put me in a state of unease. With my major gains from BRK in 2021 I’m happy playing it safe for a bit.
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I did-- Sold 2/3 of my BRK/B CALLS and half of my BRK/B PUTs this week. Sold miscellious positions like DLTR, ABAB, etc… Since the summer of 2019 made more than 99% of what most people make in their lifetime. Only hold Berkshire now and investment real estate. I always sell early, but it has worked out OK. Berkshire has been a major holding since 1995.
Thank you Jim!
I have sold about 5%.
Another 5% will sell if BRKB > $310 on Jan 21. Net $313.5 with option premium.
Another 20% will sell if BRKB is > $320 on Jan 21. (Don’t want this!) Net $322.5 with option premium.
Was 75% BRK when the week started.
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Thanks for sharing your selling plans and strategies. Are these sales in tax-sheltered accounts? If not, how do you account for taxes (if at all you do)?
For me, a major deterrent to selling stocks is taxes, especially those pertaining to short term capital gains. I know that one should not let the tail wag the dog (i.e., not let taxation drive stock purchases/sales) and instead, make decisions based on the stock price in relation to intrinsic value. However, with a marginal tax rate of 35%, most or all of my gains in stocks such as DLTR will be completely wiped out if I sell now.
Personally, for me to sell a company that is growing IV at a decent clip, the stock has to be significantly overvalued (defined as at least five years worth of future earnings already accounted for in the current price; in other words, little chance of price appreciation for the next five years based on fundamentals). This bar has been hard to meet and so, in most cases, I just hold for years and years.
Thoughts welcome! Thanks again!
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Yes. These are all in IRA’s. I never touch the gain in the taxable account.
One observation. I never thought I would see BRKB catch MSFT again. Both around $313. I won both and am selling some BRK to buy more MSFT.
The gap was 50+ less than a 2 months ago. Of course they were even maybe a year ago as well.
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However, with a marginal tax rate of 35%, most or all of my gains in stocks such as DLTR will be completely wiped out if I sell now.
I don’t see how this could be the case, since you only get taxed on the gains, not the entire share price. If you bought at the bottom when Jim posted about DLTR, at say $90, and decide to sell at $142, your profit is $52 per share, up 57.7%. At your marginal 35% tax, your tax bill would be $18.20 per share (52 x .35), leaving you an after-tax profit of $33.80, or 37.5%.
Tails
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Most of my BRK is taxable (@$78k per A share)so I’m still not touching it. I’m selling oil and gas holdings from our IRAs. At $80 oil there is plenty of supply available, even if investing in hydrocarbons is out of fashion.
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Tails,
Of course, you are right. I inadvertently applied the tax rate to the entire amount, rather than on the gain. However, the broader point about foregoing a big chunk of profits to taxes remain, at least for stocks held for less than a year.
Thanks for catching that.
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What’s significant?
I Sold 25 B shares (out of 175) held in our IRAs @ $313.33 a couple of days ago.
It was a planned move to get to a target $ allocation. Potentially could be used for living expenses, as I expect to take a distribution from that particular account this summer, but for now it is in cash.
Current plan would be to sell a little more (maybe 10 or 15 shares) around $355 or buy some around $275, but those numbers are not carved in stone. Not expecting to see either price very soon.
Additional Brk.b shares in a taxable account will remain for now, with no plans to sell.
To possibly avoid this conundrum, think ROTH, somewhat less attractive with durational limits, but still valuable.(After tax contributions. )
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Current plan would be to sell a little more (maybe 10 or 15 shares) around $355 or buy some around $275, but those numbers are not carved in stone. Not expecting to see either price very soon.
Sounds like a good “selling Options” situation then. Sell a $360 Call, and also sell a $270 Put? Pocket the premium in the meantime. (Unless you don’t want to work with 100 share potentialities.)
Tails