Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Alan Bell who wrote (11070)	1/12/2000 9:57:00 PM
From: MrGreenJeans	Respond to of 15132

Alan But for holdings like his one in Portfolio 1 from Janus, 75% of its value is capital gain. It would take a 20% correction to break even on selling it. If one just sells the low gain funds, then one is left with only aggressive funds that are likely to take a big hit. What I am thinking about doing is hedging these aggressive funds with short QQQ. Thoughts? Funny you mention a situation like this. I have a few stocks such as Msft. My cost basis is $2 per share. If I sell I pay tax on about $103 (at the moment). The federal tax rate on long term capital gains is 20%, throw in city and state taxes and there is another 10% tax on the gains. My breakeven is about 30% under these circumstances. So if I sell and pay the tax I would have to anticipate a bear market of 30%+ for this move to pay off and even if the bear is 40% I would only lose 10% under these circumstances if I did nothing and held the shares vs. selling and paying the tax. So what to do? After careful thought I could have shorted against the box. Windows 2000 comes out in February and with a short against the box I may miss significant upside. Instead what I am deciding to do tomorrow is take a position in either ryaix or uspix and use a mutual fund to short the QQQ in volatile proportion to my Msft shares. A similar situation presents itself in Vodafone. American telecoms will coming knocking in Europe to achieve a global reach. One or more may make a bid for Vodafone, with or without Mannesmann, I am reluctant to sell Vodafone under these circumstances. In this situation I am thinking of purchasing puts for downside protection. Alan, your situation is one many of us face and there are no easy answers.

To: Alan Bell who wrote (11070)	1/12/2000 11:19:00 PM
From: Math Junkie	Respond to of 15132

My personal decision about the tax issue is to go ahead and sell when I think it is warranted. The problem with holding on for tax reasons is that you are betting that any downside will be limited to your tax hit. As for hedging, that could work, but I opt for simplicity. And one advantage of selling now is that once those taxes are paid, you don't have to worry about paying them again when you finally want to start spending some of your gains. "Render unto Caesar that which is Caesar's".