Saul,
I couldn’t agree with you more!
I have too many stocks in my portfolio and I am trying to trim it down, these discussions and this site is convincing me of doing it.
I was always afraid of putting too much money in one basket, but what you are saying makes 100% sense to me.
Thank you for your help
Erik
1 Like
As for taxes, I take almost all my starter positions in an IRA account, but if I’m selling out of a small position at a small loss, it’s good for taxes anyway.
Just so I understand, you would take a starter position in a new stock in your IRA and then, if you wanted to increase your position later, you would do so in the taxable?
I’m doing the opposite. I take the starter position in the Taxable. If it bombs, I take a loss. If it looks like it is moving in the right direction, I buy more in the IRA. SZYM is a good example. I first bought some in the Taxable. After researching more and deciding I like the stock and it sure looked like a winner, I bought a large position in SZYM in my IRA
Have I got it reversed? (It sure wont’ be the first time that has happened, hahaha).
Mykie
PS then I sell puts in either account depending upon my maintenance requirement limits.
The only thing that matters is how the stocks you are in do. Really, think about that and absorb it.
This makes most sense and it gets me one step closer to fixing the bugaboo that I presently carry around with me and that keeps me in what I originally thought to be loser stocks.
I have internalized that bit of info and I thank you. You must be one hellova doctor.
Mykie
PS How did your endoscopy turn out? Good I hope.
If you have more than your desired position on TCS, then writing calls against a portion of your shares is good. It will bring income, which sort of reduces your cost basis. I say sort of because from a taxation point of view it does not; premium income is short term gain.
Hi Anirban,
I thought when I sold a CC the premium lowered my cost basis such that if I held that stock for over a year, I could get capital gain status. Tell me I’m right and you are wrong above there.
Hardly seems fair. So if I write a put and receive a premium and then get the stock assigned to me, is my cost basis lowered by the premium or is that too just a short term gain? I seem to recall some type of option, if the stock is held over a year, gets folded into the cost basis but I sure wouldn’t bet on my memory.
Anyway, I am many months away from using earnings like you and Saul do in order to make intelligent buy/sell decisions. It is something I haven’t done and really don’t know where to start, (think minor mental block) although way back Saul gave me his methodology on how he tracks sales and profit growth and I saved it for that rainy day when I feel up to tackling a new task that involves numbers.
Mykie
What I get out of this is focus on your stocks and really get to know them. He listens in on all the conference calls etc and is not afraid to get out when he hears something negative.
Hi Erik not the red,
Thanks for including me in that very excellent duo. You are quite right, I’ve learned from Saul here to jump in, grind away and learn that company as intimately as possible. This kind of a strategy, (there are other successful kinds) would dictate a smaller portfolio than what I presently have and having seen the same light you have, I am trying to reduce stocks in my portfolio while at the same time concentrating the balance of my holdings. I love the idea of being an expert in a company/industry. This is what conviction is all about.
I think it was Anirban or Andy that said he didn’t want to own a steak house stock since he’d then have to follow it for 10 years and I believe that’s another component in successful investing.
The exciting story generated by companies like CAll, UBNT, SZYM et al, really makes investing so interesting that I can’t get enough of it. My wife made me promise I wouldn’t talk shop 7 days a week, 14 hours a day. I try to read to her some of the stories, thinking this is so exciting it’s better than a novel but as you would guess, she’s nonplussed and I am FORBIDDEN to talk stocks one day a week, no matter how interesting I THINK it is.
I’m just rambling but I did want to thank you for sticking me in there with those two good and smart guys.
Mykie
2 Likes
Hi Mykie,
Okay, so I have very little idea of US taxation laws. You are a MF One member, right? You might want to check MFO’s writeup on options and taxation.
Below is my interpretation of how these are handled. Please check with an accountant or the rule book to make sure how it works. I believe MFO has good reference for US taxes.
I thought when I sold a CC the premium lowered my cost basis such that if I held that stock for over a year, I could get capital gain status. Tell me I’m right and you are wrong above there.
Suppose you bought 100 shares for $20 each on 1/1/14. Now, suppose that you sold a call against and received $1/share as premium. Let’s assume that the call was written on 6/1/14. Consider the following cases:
(a) The call expiration was 1/1/15 and the stock got called away. Then, your sell price is $21/share and it qualifies as a long term holding.
(b) The call expiration was 1/1/15 and the stock did not get called. Your $100 premium is short-term gain.
(c) The call expiration was 9/1/14 and the stock got called away. Your gains are short-term, with a selling price of $21/share.
So if I write a put and receive a premium and then get the stock assigned to me, is my cost basis lowered by the premium or is that too just a short term gain.
I believe the cost basis is reduced just as you mentioned above.
Anirban
1 Like
I’m doing the opposite. I take the starter position in the Taxable. If it bombs, I take a loss. If it looks like it is moving in the right direction, I buy more in the IRA.
Mykie, I’m not a tax expert, but what you are doing sounds correct. I’ve got a special case. When I retired I naturally tried to keep funds in my IRA’s as long as possible, so I pulled money out of my regular accounts to live off of, while the money in my IRA’s kept growing. So now most of my money is in IRA’s rather than taxable accounts.
Saul
1 Like
When I retired I naturally tried to keep funds in my IRA’s as long as possible, so I pulled money out of my regular accounts to live off of,
Hi Saul,
Yes, that sounds like a plan that I will also follow.
I haven’t started living off of the taxable yet but will in a few years, depending upon the outcome of some real estate investments I also have.
It’s a race to the graveyard or the poor house, whichever comes first.
Hahahaha
Mykie
1 Like
More SZYM NEWS,
Found this in the comments section of a SA article by K. Quon by my favorite commentator, Geosteam:
PS SZYM has deals with Dow, Unilever, ADM, etc…hardly a company that is going away and certainly one that a factory delay is not going to stop it from reaching its potential.
Folks,
Good news is beginning to pop out of the ground like spring sprouts. Here’s a quote from the Solazyme website regarding the dielectric fluid agreement with Dow Chemical:
“Consumption of Solazyme’s algal oil feedstocks is expected to significantly exceed the minimum estimated volumes of 8.5 million gallons (29,000 metric tons) starting in the second half of 2013 and through 2015. The offtake agreement contemplates that final pricing for the oil will be linked to certain items including Solazyme’s sugar-based feedstock costs.”
Couple this remark with the price ($205) from Grainger’s for five gallons of dielectric fluids.
http://bit.ly/1topSDj
Simple math indicates a total potential revenue of $348 million from 8.5 million gallons at $205/5 per gallon. This number can be considered a ceiling of the maximum possible value. Solazyme will only realize a fraction of that number, but the high ceiling clearly indicates there is a lot of financial maneuvering room.
I like high ceilings.
Geosteam
1 Like
I haven’t started living off of the taxable yet but will in a few years,
Mykie,
Once you get to 70 they make you start taking a small percentage each year out of your IRA whether you need to or not. Your accountant will tell you about it. I think it’s based on your life expectancy
Saul
Once you get to 70 they make you start taking a small percentage each year out of your IRA whether you need to or not. Your accountant will tell you about it. I think it’s based on your life expectancy
Sau
Hi Saul,
Yes, I’m over 70 and understand the mandatory distribution however, if I only take out that approximate 4% of the total but grow the portfolio by anything more than that, I can preserve that chunk of money for later use, hopefully all winding down with the last few pennies spent on a nice party.
Mykie
2 Likes
Mykie,
Just don’t live in MD, as they tax your estate at 16% after the first million. Federal Taxes kick in above $5 million and increasing with inflation.
So, on the one had I am seriously contemplating of moving, but on the other hand, my goal is for the last check to bounce when I hit the bucket, so why move. I like it here
Erik
So, on the one had I am seriously contemplating of moving, but on the other hand, my goal is for the last check to bounce when I hit the bucket, so why move. I like it here
Haha…there you go, trying to time the market again.
Mykie
A happy guy living in Mexico but soon to spend half his time in LA and half across the border. (The new attraction in LA is my new grandson. This kid is going to need a talented, caring, smart, strong…baby sitter