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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Rande Is who wrote (9939)	7/21/1999 12:17:00 PM
From: Kevin Shea	Read Replies (1) \| Respond to of 57584

Been watching the counter play between LQID and MPPP ....VERY interesting to see what happened ... when MPPP opened, LQID dropped quickly (immediately) as MPPP sank LQID rose....talk about momentum!

To: Rande Is who wrote (9939)	7/21/1999 2:08:00 PM
From: Joe Smith	Read Replies (1) \| Respond to of 57584

Just a little anecdotal tax example Let's say you bought 500 of ORCL at 25 and were looking to sell at 37 1/2 for a nice even 50% profit. Short-term gain. You expect little upside and maybe some downside to the low 30's. You want to sell now and get back in at the lower level for another swing into the 40's. So you sell. The taxman treats it as income since it is short-term. Let's assume that between state and federal, the tax bite is 1/3. So you have a $6250 profit and you lose $2083 of that. You're left with your $4167 profit and your $12500 principle for $16,667. So what is your break-even here to get back into ORCL with 500 shares. The answer is 33.33. So the stock has to drop a little over 11% before you can buy in again with your cash and break even with 500 shares. So the bottom line for the short-term trade is this. What percentage of your investment is a gain. In this case it was 33%. Take a third of that, in this case 11%. That is the how far the stock must drop before you can reenter with your cash and break even. In the case of the long-term gain, you are looking at a 20% federal tax bite, plus state taxes. Let's just use the 20%. Here you the percentage of the investment that is gain and take 20% of that for your breakeven. In this case it wqould be just shy of 7%. It's enough to make you look at Muni's