I also believe in keeping separate accounts, for separation of intent as well as diversification (don't put all your eggs at one brokerage!!).
Longer term and tax advantaged accounts doing fine. taxable accounts doing terrible. Why? A relatively simple problem day traders do not have to deal with. Over consideration of the tax consequences of a sale. And I have to admit, I've now made the same mistake twice in 9 months.
I have a couple of positions (one piece currently at Yamner) in stock obtained with ISO's (I do not wish to include the name / ticker) that has a very low basis. As the stock increased in value to a point I felt could not be supported, I sold some covered calls. Not knowing any better at the time, the calls ended in the money and I let some of it go. (I would now roll the calls out to a future date, with a higher strike. Thanks Steve G.)
Looking at the stock price in August 97, I felt it was overextended, but didn't feel it would fall enough in the short term to justify the tax consequences, with only a few months left in the year to play before I had to pay.
Wrong. It dropped over the next few months by 45%. I thought I had learned a lesson.
Stock recovers, starts looking like it is within a range. Nothing to cause it to move significantly in either direction. Sell a few covered calls to generate cash. Stock moves up over several weeks, approaching it's previous levels. I believe the price will not hold, but don't believe it will fall far enough to cover the taxes.
Down 50% again, and it's still in my account.
Second time I learned. Really. I mean it this time ...
Enjoy the ride,
Ira
p.s. I made other errors lately, but this is the one I am most annoyed by because it is pure dumb. The others were stretching the wings a little bit in areas I want to learn. (;^)>
|
