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: Investor2 who wrote (2392)	12/4/1998 11:22:00 PM
From: Bill Shepherd	Read Replies (1) \| Respond to of 15132

RE: I urge all Bob Brinker followers to immediately calculate their capital gains tax liability! Don't let it surprise you on April 15, 1999. I2...you have brought up an excellent point. Hopefully, many of Brinker's followers are dealing with tax-deferred funds, and thus, won't need to worry about taxes...yet. At this point, about the only tax strategy available for people with taxable gains is to consider offsetting those gains with losses. (Holders of UTEK may want to consider this <grin>) Here is one possible strategy: Pick a stock that has an existing loss, and sell enough shares to offset your gains (or more, if you chose). This will reduce or eliminate your current capital gain liability. You can then either repurchase the stock (at least 31 days later) if you think there is some future gain potential. Or, you can immediately purchase shares in a "cousin" stock, thus maintaining your equity in the industry. Your overall point is well made, however...all the watermellon smiles will mean a tax liability at some point...sometimes sooner than expected. One thing is for sure, sadly, the government will reap the fruits of your risk-taking! Good Luck Bill S

To: Investor2 who wrote (2392)	12/5/1998 8:42:00 AM
From: Boca_PETE	Read Replies (1) \| Respond to of 15132

I2: re:<I urge all Brinker followers to immediately calculate their capital gains tax liability!> Why would a BEAR who predicted market meltdown during the August-Oct period need to follow your advice ? Presumably such a person would be earning only money market returns since bailing out of the market. P :-) PS> LOL: Your subtle humor skills are really honed to the ultimate.

To: Investor2 who wrote (2392)	12/5/1998 11:37:00 AM
From: DD™	Read Replies (2) \| Respond to of 15132

TAX QUESTION FOR The Justa & Lars Honors Bob Brinker Investment Club Can broker commissions be deducted/added from/to capital gains/losses? DD

To: Investor2 who wrote (2392)	12/6/1998 2:14:00 AM
From: Lars	Respond to of 15132

* New Sector Index Shares For The AMEX * Omaha World-Herald November 23, 1998 - Expect to see more SPDRs, DIAMONDs and other so-called index shares in 1999 - And also expect many of these index shares on the AMEX to be much more tax efficient then their mutual fund industry friends (per JayBaker VP of Derivative Marketing and Research for the AMEX) - A major firm will introduce about 30 new investments for the AMEX - No one knows the firm yet but the new securities would represent other indexes such as the Russell 2000 and the NASDAQ 100 - There will also be 9 sector SPDRs competing DIRECTLY with Fidelity Select Funds - Investors have poured $11 billion into SPY since they started trading in1993 - SPDRs are the most actively traded stock on the AMEX and have more daily volume than all but two stocks on the NYSE - DIAMONDs are also among the most actively traded stocks on the AMEX - Baker pointed out SPDRs and other index shares trade throughout the day so investors can get them at market price rather than the end of day price they get with MFs - He also noted the index shares are MUCH MORE tax efficient than regular MFs - The SPDR has distributed 9 cents worth of capital gains in it five years of existence compared with 55 cents distributed by Vanguard Index 500 - Plus the SPDR holds only $1 a share worth of unrealized capital gains, versus the $24 to $28 a share the Vanguard Index 500 currently holds - The real damage is done by capital gains distributions in capital accounts - SPDR makes fewer distributions and has so much less unrealized capital gains because each SPDR share is a piece of a unit investment trust that holds the corresponding stocks - When an investor sells a SPDR share their piece of the trust is sold to someone else - The corresponding stock is NOT sold out of the trust so there is no gain distributed to holders - If their were a big run on SPDRs the trust should still be able to avoid selling shares - If a lot of people wanted to sell traders would buy SPDRs and sell a corresponding amount of futures to hedge against losses so no shares would be sold out of the trust - MFs have to sell shares when they get redemptions and are required to pass on all their gains to shareholders - SPDR has been able to keep unrealized gains lower by passing along many of them to arbitrageurs who are constantly trading the difference between options, futures, indexes and index shares - Baker said they only have $100 million in unrealized gains because they have pushed out the lowest-priced stock - E.G. If an arbitrageur redeems 1 million SPDR shares @ $100, the trust will give him $100 million worth of S&P 500 stocks (the arbitrageur gets the current market price as his cost basis so he doesn't mind taking the shares)

To: Investor2 who wrote (2392)	12/6/1998 2:33:00 AM
From: Lars	Respond to of 15132

* Initial Thought/Observations on Sector Index Shares * 1. Couldn't investors disregard MFs, including Vanguard's index funds, if the AMEX obtains a Russell 2000 SPDR? (for the passive part of their portfolio) At that point the couldn't the investor just by SPY, the midcap (I forgot symbol for S&P 400) and the Russell 2000 and have a fairly nice diversified portfolio representing the large cap, mid cap and smaller cap areas. I think their would be some overlap. Does anyone know specifics? Wouldn't this be similar to setting up one's portfolio to approximate the Total Stock Market if you allocated based on 74% large, 15% mid and 10% small? It wouldn't be exact but wouldn't it be a fairly accurate means to achieve one's goals without MFs. 2. This would alleviate concerns for non-investment advisors who have to mail their redemption requests to Vanguard. We have discussed this issue in brief in the event of a sell signal from the Starship Commander. 3. Won't it be interesting to see competition for Fidelity Select funds? The individual investor won't be saddled with a 3% load nor the high expense ratios with the sector index trust. New, cheaper investment alternatives. 4. What other issues have I missed? How else could the new sector index trusts help or hurt the individual investor's portfolio? Also, please correct any errors I may have in my thought process with the above points. I am typing this way too late tonight.