Joan, Funny you should mention taxes. Long ago I made it my business to remember word for word, important things people say. At times it is hard to weed out what is important but some things you can't miss.
A while ago I called my CPA because I'd made 14K overnight on a stock pick and I wanted to sell. Because I was up so much YTD I was worried about taxes. My CPA reminded me first that although I'd left a high figure job to do what I do now (be home and still make money), how many 14K days did I have? Then he said something I'll never forget. He said "Why don't you think of stock profits as income. When you worked for corporations, one third of what you made went to taxes." Light bulb...... more money, about the same percentage of taxes, income, death and taxes, DAAAAAH. Sold.
I'm Tom Sawyer of the year 2K, even when it comes to taxes. It seemed to me that unlike any other form of income, when trading stocks there must be a way to pay your taxes and even make money at times while doing it. I know this sounds crazy but just go with me.
What do I invest in? Internets, some other tech stocks but I invest in internets because they are where the action is and where the money is. So here is the "problem", due to all the 909ers I turn, I have to lose money in some stocks or else I better plan ahead for Mr. Taxman. Now this is where the Tom Sawyer in me came in. Can you figure out how you can at times make some really big money while trying to lose it? Internets.
Here is how this works. Let's take a real life example from the past month or two. I bought AOL @ 90 something shortly before the S& P news. I bought a pile-o-GNET at the same time for 30 something and held. I sold AOL @ 160 a short time later bought some CMGI cheap, which I turned right around after the split and sold at 123 and then I bought more GNET on a dip with that. Now we have some serious profits and Uncle Sam is going to want his share.
I could just hand it over to Uncle Sam or then again I could lose some of those profits and not have to pay on them. In a perfect world I could just make so much money I didn't care about taxes or not have to pay some of those taxes. This is a perfect world.
Internets go up and they go down, often. So when I have big profits I do what many people do, I sell those stocks that are in my portfolio and are not doing what I bought them for, I take a loss to off set profits. This is how one gets out of dogs and in the boys that can hunt. I'm sure lots of people do this and think it is the best thing to do. But what if you have a "problem", what do you do when you have a portfolio with no losers, a portfolio up several hundred percent year to date? Uncle Sam is licking his chops on this one, what are you going to do? That is what I ask myself. You could hand over the money on the profits or you could have some fun, go on a Techride.
Now being a Tom Sawyer type it seemed to me there must be a way to use this taxes/profits thing to reduce my risk in internet stocks and even make me more money. I know this sounds crazy but go with me.
A more fun thing to do than to pay Uncle Sam is to take some profit money and put it in an up and coming internet stock. A high flyer, a high risk/reward TYPE II internet. I like to do this right after internets get wacked. If you lose money big deal, a loss just equals out some profits, no gain, no tax, it was money going bye-bye anyway (to Uncle Sam).
Every once in a while I hit one of these TYPE IIs and end up with a triple 909er. Most people would gladly hand over a third of that triple 909er money. I know I have, many times. 909ers I would not of had if I had not gone on a Techride. GNET was a TYPE II when I first bought it with profit money from DELL, LU and others from the old Techride, you know old boring ho-hum tech stocks we used to trade?
When I have to pay taxes or take a loss due to profits, I move some profits to a cheap (He who has the most shares...) internet company that may pop and then again it may drop. This is the best way to invest in TYPE II internet stocks (higher risk internets, eg internet pennies) and reduce overall internet investing risk, you play TYPE II internets only with profit money. If you lose money (profits), big deal, bummer for Mr. Taxman and you got to play a TYPE II internet that you may not have put money in to. If you hit big, 909ers, then everybody is happy.
It is hard to explain something like making money while trying to lose it, while reducing risk but, I think you have the drift of what I'm talking about. Let me know if I explained this OKay.
Again, the standard disclaimer, this works for me may not work for you. Do your own homework, blah, blah, blah (for any FNGs out there).
Let's face it, Uncle Sam has your SS# and he is going to get his share or your money. Why not lose some profits vs paying taxes or hit it big and make Uncle Sam really happy? It all has to do with what you do with profits and why it is not always a bad thing to try to lose money. When you have lots of 909ers you don't mind giving some back to the market or Uncle Sam and yes you do have a choice.
If you wonder how I ever thought of using the tax/profit thing to at times make money while reducing the risk on high risk/return internets, it was very simple.
Most people in the market are trying to make money, as we know some that try to make money, lose money. That's the odds, we all can't make money, all of the time. Seems to me then, that if you try to lose money, by odds alone, you have to make money at times while trying to lose it. One of them thar ying-yang things, a positive/negative thing, a stranger than strange thing, a Voodoo Economics Money Physics thing.
Got to go, the Yellow Dogs say the IRS and a goon squad are on the grounds. Just joking, 909ers to all, BLUE |
