Suppose you owned a stock for 1 month. In one month, it goes up X %. If you sell it, you must pay a higher tax rate. What is a reasonable % increase to warrant selling at the higher tax rate. If the stock went up 0.01%, then it would not make sense (unless you know the company is going bankrupt the next day). It would be better to hold onto to it and hope it goes up and pay a lower tax rate for holding onto it longer. On the other hand, let's say the stock rockets by 80%. Then, it might be worth it to sell and eat the higer tax rate.
2007-01-23 06:46:48 · 8 answers · asked by InvisibleWar 2 in Business & Finance ➔ Investing
There is no answer to this question...have your targets and your stops...
2007-01-23 12:49:33 · answer #1 · answered by Nick C 3 · 0⤊ 0⤋
It is not the gain that I would be concerned about. It would be the technical indicators. If the stock doubled in price and then dropped back about 25%, I would probably unload it.
If the stock went up 200% and showed no signs of weakness, why would I want to sell it? There may be more good things to come. Maybe the company had announced a cure for stupidity and they were going to try it out on Bush.
2007-01-23 07:49:36 · answer #2 · answered by Anonymous · 0⤊ 0⤋
1) I trade for the intermediate term (4 weeks to 4 months) Since I (nor anyone else) cannot foresee the future, I would take a 4% gain in 4 weeks. This amounts to a 52% gain on a per annum basis.
2) Yes, the long/short term rates are important, but I find that I can compound my total earnings by taking such profits.
3) However, it depends on your temperment. Would you beat yourself over your shoulders if it did rocket by 80%? I don't; I just move on, looking for another 52% (if I'm lucky) p.a. gainer.
4) I've learned to not cry when I have to pay S.T. gains to the IRS.
2007-01-23 07:43:44 · answer #3 · answered by Puzzleman 5 · 0⤊ 0⤋
Ahhh the age old question on when to take a profit. My thoughts Profit is profit. SO WHAT if you pay a higher return. NOW, I trade some stocks depending on the momentum ....I also keep core shares for long term IF i think overall the stock will be significantly higher years down the road. BUT, take advantage of market swings and trade some of the shares......If you make money after comissions then you did well with those trading shares.............
2007-01-23 07:20:25 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Id say, probably the average market return + the difference in percentage between capital gains tax for each scenario, would be a reasonable point. That really depends on the performance you expect the stock to follow in the future though.
2007-01-23 06:59:32 · answer #5 · answered by M O 6 · 0⤊ 0⤋
Enough to pay your broker's fee and attain what-ever profit you are hoping for. Your added income at tax time will cost about 20% of the profit.
2007-01-23 06:53:51 · answer #6 · answered by badbill1941 6 · 0⤊ 0⤋
Don't listen to "Zila" investments don't work that way.
Remember, a profit is a profit and they are always welcome.
When your stock has gone up enough to make you worry...Sell it.
2007-01-23 08:39:45 · answer #7 · answered by bob shark 7 · 0⤊ 0⤋
Fourth answer was the best, go with that one.
2007-01-23 13:21:32 · answer #8 · answered by Anonymous · 0⤊ 0⤋