Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!
Think about it a little - if you sold your shares, you won't be able to buy any more than 8 shares again. If you had a TIME MACHINE - sure - go back in time and buy more shares @ $114. But as it is - you'd just incur transaction costs...
xaznxeclipsex said: Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!
xaznxeclipsex said: Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!Huh? If paying tax on your $500 earnings is a bad thing, and paying tax on your $500 earnings is the only consequence of selling/rebuying, then why would you want to do it?
coaster831
Member
posted: Dec. 12, 2007 @ 12:52p
xaznxeclipsex said: Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!
<Taps sarcasm meter>
You still would only be able to buy 8 shares. Apart from the fact that you will incur short term capital gains taxed at your regular income rate and a possible brokerage fee.
addy2000
Member
posted: Dec. 12, 2007 @ 12:54p
Are you buying more shares of the same stock? Or of a different one?
If you're buying the same stock, this would be an incredibly dumb move, as you'd sell 8 shares at $190, pay the taxes on them, then pay $190 per share for 8 shares again. What exactly do you think you're gaining in that scenario?
If you're buying a different stock, the answer will depend on the future. Do you think the future gains on that stock will be greater than the gains on Apple plus the taxes you pay when you sell? If so, buy it. If not, then don't. Since nobody can predict the future, nobody can tell you whether this will end up being a good move or not.
tazzy531
Senior Member - 4K
posted: Dec. 12, 2007 @ 12:57p
xaznxeclipsex said: Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!
You almost made me spit out my tea!
Going into hall of fame.
xaznxeclipsex
Member
posted: Dec. 12, 2007 @ 1:18p
Haha stupid me!! I forgot max I can buy is 8 shares if I sold it. Told you guys I am brand new to this !!
I guess best bet is to sit on it, or just use more money to buy more...
chief100
Member
posted: Dec. 12, 2007 @ 1:26p
new to the market or new to math?
Nummerkins
Senior Member
posted: Dec. 12, 2007 @ 1:38p
xaznxeclipsex said: I guess best bet is to sit on it, or just use more money to buy more...
xaznxeclipsex said: I guess best bet is to sit on it, or just use more money to buy more...
Not exactly. Do you think that the stock will be worth more in 6 months or less? If less you should sell and not buy any more until 6 months from now. If More you should hold on to what you have and possibly buy more.
Take out the words six months and insert any time frame and you will have your desision point on if to buy or sell a stock.
If I did not once exercise an option instead of selling it, because my calculations showed this was more profitable (when in fact, I ended up losing money instead of gaining because I failed to account for the premium I paid on the original transaction in determining my basis), I'd make fun of the OP.
Congrats on making money on your first foray into the gambling ring known as the Stock Market.
I love Apple. Buy Apple Products. Lots of them. And often.
xCarsonx
Senior Member
posted: Dec. 12, 2007 @ 2:13p
xaznxeclipsex said: chief100 said: new to the market or new to math?
haha ok ok new to both.
Well I'm glad realized what was wrong. I think you read the thread the other day where someone was talking about selling mutual funds when they are down and purchasing them again so you can claim a loss on the year. But you purchase them to still hold your positions when they go back up.
You have the same idea it would only maximize your taxes instead of minimize them.
Green for you, you may be a new investor, but I am willing to bet no one in this thread has a greater gain on their stock portfolio than you (if this is your only stock). $114 to an intraday high today of $195--- a 71% return. I assume you bought in late May or mid August. That return is equivalent to one of the highest YTD mutual fund returns, including China focused funds.
You may not know shinola about selling, but you're darn good (with a tad bit of luck and courage) at buying.
Did you draft Tom Brady and Adrian Peterson in your FF football?
This is a classic post and you are wise to ask questions. Good luck.
CoffeeEater
Greedy Member
posted: Dec. 12, 2007 @ 2:28p
I wouldn't sell all 8 shares. Sell half and then buy more Apple shares (I'm not sure how many that'd be though).
Its not really a silly question, and there ARE times that doing what OP proposed would make sense:
1. He has a low paying Job (or no job) now, but KNOWS that next year he will be raking in the bucks. Paying taxes now (or possibly not having to pay taxes (because of income levels)) would make sense. He then creates a new cost basis by re-buying the shares, thus paying less tax NEXT time he sells (or minimizing losses, if he puts a stop on the share price).
2. He needs cash NOW, but can somehow recover that cash 3, 6 or 9 months from now... and possibly buy 15 shares (if the price of the stock drops).... or he might only be able to buy 2 shares (DSD's DREAM!!!!).
3. Op has read a book or 2, and has decided to diversify... but has no cash.... so he sells HALF his current portfolio (just had to say that), pays the tax and transaction fees, then buys 1 share of google (thus doubling the amount of stocks in his portfolio).... woohoo, not all the eggs in one basket!
I know the above are oversimplifications, but I am sure someone, under the right circumstances, could strongly justify why the OPs idea (or PARTS of his idea) aren't too way out there....
xaznxeclipsex
Member
posted: Dec. 12, 2007 @ 2:51p
well i guess i was lucky to buy apple, i just picked up some intel. Next I want to learn is Options.
tazzy531
Senior Member - 4K
posted: Dec. 12, 2007 @ 3:42p
bamadad said: Green for you, you may be a new investor, but I am willing to bet no one in this thread has a greater gain on their stock portfolio than you (if this is your only stock). $114 to an intraday high today of $195--- a 71% return. I assume you bought in late May or mid August. That return is equivalent to one of the highest YTD mutual fund returns, including China focused funds.
Right after the announcement of the iPhone, I dumped my entire investment account into the company. Holding onto 91.46% gains on it. Bought on 12/12/06, 2/27/07, and 6/26/07. Sold 1/3 on 9/25/07.
brushwood
Greedy Member
posted: Dec. 12, 2007 @ 4:04p
I bought Apple stock at $11 a share and sold it for $13 a while later (before the stock split) to buy a house. I'm so glad I'm not throwing my money away on rent and own something that never depreciates.
Dealing
Senior Member
posted: Dec. 12, 2007 @ 5:33p
I am not sad because I am not making money in the market - what makes me mad is that people with skills of OP are making money while I continue to see my portfolio dwindle.... grrrrrrrrrr
xaznxeclipsex said: Haha stupid me!! I forgot max I can buy is 8 shares if I sold it. Told you guys I am brand new to this !!
I guess best bet is to sit on it, or just use more money to buy more...
brown1978
Ancient Member
posted: Dec. 12, 2007 @ 5:39p
brushwood said: I bought Apple stock at $11 a share and sold it for $13 a while later (before the stock split) to buy a house. I'm so glad I'm not throwing my money away on rent and own something that never depreciates.
Alot of houses are going down the hill right now..
kzouchio
Member
posted: Dec. 12, 2007 @ 8:13p
sell the stock next year and if you've held it a year or more the capital gains tax will be 0%. Then you can buy it back to pick up your tax free gain and reset your basis.
tazzy531
Senior Member - 4K
posted: Dec. 12, 2007 @ 8:37p
kzouchio said: sell the stock next year and if you've held it a year or more the capital gains tax will be 0%. Then you can buy it back to pick up your tax free gain and reset your basis.
BAD BAD BAD... Bad Advice. This is WRONG! Long Term Capital Gain is 15% (5% in special circumstances)
xaznxeclipsex said: well i guess i was lucky to buy apple, i just picked up some intel. Next I want to learn is Options.you will be raped, murdered and your dead body sodomized if you get into options with the skill set you have thus far demonstrated.
tazzy531 said: kzouchio said: sell the stock next year and if you've held it a year or more the capital gains tax will be 0%. Then you can buy it back to pick up your tax free gain and reset your basis.
BAD BAD BAD... Bad Advice. This is WRONG! Long Term Capital Gain is 15% (5% in special circumstances)
Well, I agree that it's an overstatement; but, in certain circumstances the LT Cap Gains tax will be ZERO in 2008 for some taxpayers in the lowest brackets. Text
Kind of unbelievable, but that's the tax code. Under the 2003 tax act, people in the 10 and 15 percent federal tax brackets will pay 5 percent on long-term capital gains and qualified stock dividends from 2003 through 2007 and zero percent in 2008. After 2008, the rate jumps back to 10 percent.
Also, while I applaud you (Tazzy) on your luck or foresight with Apple, OP's gain is over either about 6 months or just 4 months, so his return is 2x or 3x times 71% compared to your 91%. I should leave it unsaid about holding just one stock. In any event you picked an incredible winner-- good for ya. congrats.
thegooddoc10
New Member
posted: Dec. 12, 2007 @ 9:08p
DavidScubadiver said: xaznxeclipsex said: well i guess i was lucky to buy apple, i just picked up some intel. Next I want to learn is Options.you will be raped, murdered and your dead body sodomized if you get into options with the skill set you have thus far demonstrated.
Don't sugarcoat it DS, tell us what you really think about his idea. Notice that he says he wants to learn about options. Learning is good, so let's not criticize him for showing initiative to want to learn. Be very careful though and learn as much as you can about the options.
DavidScubadiver said: xaznxeclipsex said: well i guess i was lucky to buy apple, i just picked up some intel. Next I want to learn is Options.you will be raped, murdered and your dead body sodomized if you get into options with the skill set you have thus far demonstrated.
Would this be formerkeo doing the raping? I thought he only raped the markets?
asdf9876
Happy Member
posted: Dec. 12, 2007 @ 9:36p
Formerko is the destroyer of worlds and raper of markets. With his omnipotent powers he rapes options every other Tuesday and the last Friday of the month.
wilesmt
Senior Member
posted: Dec. 12, 2007 @ 9:59p
Technologist said: Its not really a silly question, and there ARE times that doing what OP proposed would make sense:
1. He has a low paying Job (or no job) now, but KNOWS that next year he will be raking in the bucks. Paying taxes now (or possibly not having to pay taxes (because of income levels)) would make sense. He then creates a new cost basis by re-buying the shares, thus paying less tax NEXT time he sells (or minimizing losses, if he puts a stop on the share price).
2. He needs cash NOW, but can somehow recover that cash 3, 6 or 9 months from now... and possibly buy 15 shares (if the price of the stock drops).... or he might only be able to buy 2 shares (DSD's DREAM!!!!).
3. Op has read a book or 2, and has decided to diversify... but has no cash.... so he sells HALF his current portfolio (just had to say that), pays the tax and transaction fees, then buys 1 share of google (thus doubling the amount of stocks in his portfolio).... woohoo, not all the eggs in one basket!
I know the above are oversimplifications, but I am sure someone, under the right circumstances, could strongly justify why the OPs idea (or PARTS of his idea) aren't too way out there....
One is pretty good advice. Its too bad it doesn't work both ways - you cannot sell stocks(in a year where you had lots of income) you hold at a loss and then buy them back within 30 days. If you do, its a wash sale and you cannot claim the loss. It also wouldn't help to sell and buy back if you've held the share more than a year, as the gain would be taxed at 15% unless you fell into a really low income bracket, then it would be 5%. (2008 might be a little different, isnt the capital gains rate lower?)
If you sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, then sell, then buy, just think how much money you will have then !!!!!!!!
Wow, and you could do it all in one day with the wonders of electronic trading....I can't believe nobody ever thought of this before...we're gonna all be RICH !!!!!!!!!!!!!!!!!!!
Seriously, I suggest you sell the stock, put the money in the bank and don't purchase another stock until you've done a lot more homework. You could be very dangerous at this point, but congrats on the success with the Apple shares.
futurekeo
New Member
posted: Dec. 12, 2007 @ 11:17p
asdf9876 said: Formerko is the destroyer of worlds and raper of markets. With his omnipotent powers he rapes options every other Tuesday and the last Friday of the month.In future, stock buys formerkeo after I make it my lover. haha ha!
presentkeo
New Member
posted: Dec. 12, 2007 @ 11:27p
futurekeo said: asdf9876 said: Formerko is the destroyer of worlds and raper of markets. With his omnipotent powers he rapes options every other Tuesday and the last Friday of the month.In future, stock buys formerkeo after I make it my lover. haha ha!Fool? I short you in disgust. The market trembles to my desire! heh
jimbocobb said: If you sell, then buy, then sell, then buy, [...] then sell, then buy, just think how much money you will have then !!!!!!!!
Wow, and you could do it all in one day with the wonders of electronic trading....I can't believe nobody ever thought of this before...we're gonna all be RICH !!!!!!!!!!!!!!!!!!!The trick is to execute the buy and sell orders instantaneously. Bid/ask spread for teh win! With margin in your Roth IRA, you can go bananas!
theman2 said: jimbocobb said: If you sell, then buy, then sell, then buy, [...] then sell, then buy, just think how much money you will have then !!!!!!!!
Wow, and you could do it all in one day with the wonders of electronic trading....I can't believe nobody ever thought of this before...we're gonna all be RICH !!!!!!!!!!!!!!!!!!!The trick is to execute the buy and sell orders instantaneously. Bid/ask spread for teh win! With margin in your Roth IRA, you can go bananas!No, the trick is to execute simultaneous trades in a complicated scheme so that you can return more shares then you bought and make some money doing it. AKA that couple who made several hundred thousand dollars buying and returning small but highly priced items such as salt shakers.
mhesidence
Dismembered Member
posted: Dec. 13, 2007 @ 8:05a
DavidScubadiver said: theman2 said: jimbocobb said: If you sell, then buy, then sell, then buy, [...] then sell, then buy, just think how much money you will have then !!!!!!!!
Wow, and you could do it all in one day with the wonders of electronic trading....I can't believe nobody ever thought of this before...we're gonna all be RICH !!!!!!!!!!!!!!!!!!!The trick is to execute the buy and sell orders instantaneously. Bid/ask spread for teh win! With margin in your Roth IRA, you can go bananas!No, the trick is to execute simultaneous trades in a complicated scheme so that you can return more shares then you bought and make some money doing it. AKA that couple who made several hundred thousand dollars buying and returning small but highly priced items such as salt shakers.
asdf9876 said: Formerko is the destroyer of worlds and raper of markets. With his omnipotent powers he rapes options every other Tuesday and the last Friday of the month.
DavidScubadiver said: theman2 said: jimbocobb said: If you sell, then buy, then sell, then buy, [...] then sell, then buy, just think how much money you will have then !!!!!!!!
Wow, and you could do it all in one day with the wonders of electronic trading....I can't believe nobody ever thought of this before...we're gonna all be RICH !!!!!!!!!!!!!!!!!!!The trick is to execute the buy and sell orders instantaneously. Bid/ask spread for teh win! With margin in your Roth IRA, you can go bananas!No, the trick is to execute simultaneous trades in a complicated scheme so that you can return more shares then you bought and make some money doing it. AKA that couple who made several hundred thousand dollars buying and returning small but highly priced items such as salt shakers.The big players swap fiber.
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