Hambergler

OK, I understand about closing out by 12/31 and I have had a Roth for years. I'm not sure why you brought up the Roth. Is there some way to shelter cap gains with a Roth?

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xTYBALTx

It's not generally possible to AVOID paying taxes. You can have some control over when you pay, but avoiding tax payment is rarely - if ever - legally possible.

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Current Tybalt theme song: Mason v. Princess - Perfect

SmokingTarpan

Buy 200 Gamestop (GME) @ $56.34. Didn't have time to add this earlier today.

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[squadl]
"I am the prettiest african-american, vietnamese..cong..person." -SugarNCamo

Hambergler

This report came out 2 hours ago. Closed yesterday at 31.20.

Shorting 2000 shares HMC with a stop at 36. I wonder if this trade will go through first thing in the morning.

http://www.forbes.com/reuters/feeds/...-UPDATE-1.html

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leejo

Yes, by placing money in a Roth you are sheltering any of that capital's gains from tax.

AFAIK the best way to avoid capital gains tax is elect politicians who will keep them low, max out any 401(k) to which you have access, then match out a Roth, and only then start exposing your investments to capital gains tax in a regular old cash account.

I'm not a CPA, but I think once you're in the capital gains tax world, the only way to avoid it is with an offsetting loss. I can imagine some types of trusts could be sheltered but that's pretty exotic.

War.mongeR1

Hahaha. Yup. Most my middle class friends have at least some sort of investments. They may not be hedge-funders, but taxes still get everyone. I hate how certain politicians (who I'll leave unnamed) think capital gains taxes only effect the "rich" and we should just accept their tax the "rich" ideals. Not getting into politics in this thread, but when you start really investing, or at the end of this fantasy league, take your funds dividends, and THEN take 15% off. That's what it is right now. Now imagine if you lost 28% of your gains. That's what Senator Obama might have in store for us...
http://www.usnews.com/blogs/capital-...ins-taxes.html

Now, if the capital gains taxes were to almost double, do you think most stock traders would hurry up and sell their stocks to take the smaller losses before the new taxes take effect? I think they would. I predict a HUGE loss in the stock market if a Dem gets in. Not fearmongering or anything, but Carter liked ultra high capital gains taxes too, and look what that did. In 1981 the Prime Lending Rate was 18.45%!!! Unemployment was over 10%. It was the worst recession since the great depression.

*whispers...."Go Ron Paul!"

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"Common sense is not so common." -Voltaire

leejo

Suppose I have $10k in a money market fund earning 2.5%. My earnings on that this year will be $250. Take 28% of that away, and I net $180. But there's no risk.

Now let's say that instead I plunk that money down in investments that are not guaranteed and make a 10% return on those investments. My earnings would be 1000, but the tax is 280, driving my net down to $720.

But think of all the risk I take on! I can guarantee $180, but to get an extra $540 I'm risking losing much more than that. When the cap gains taxes go up, the risk tolerance goes WAY down and investments must return much higher gains to lure investors away from the safe havens in money markets and, for foriegn investors, other markets. This drives the dollar even further down, since foreign investors have even less reason to play here, and hurts our economy as investors pull their money out of equities and stop buying commercial paper.

Companies struggling with inadequate capital and cash flows must cut expenses. And so on.

IF you must increase the capital gains tax, my recommendation would be to begin phasing it in very gently the next time we're churning out a bunch of 52-week highs and record DOW #s as a means of slowing an over-heated economy instead of rate cuts, not now when we may or may not be in a recession. I'm not an economist but I believe that would have the same general effect as raised interest rates but it would hit all sectors at the same time, instead of percolating through markets the way interests rates do. This is another reason to be very gentle with the changes.

If anyone wants to continue this I'd love to in another thread. Don't want to wax boring if folks are ready to move on, or gum up this thread with this more theoretical stuff.

leejo

Bought 100 MON @124.96

leejo

Sold 50 GS @ 192.26

SmokingTarpan

Short 100 CENX @ $68.43

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[squadl]
"I am the prettiest african-american, vietnamese..cong..person." -SugarNCamo

War.mongeR1

Hey hey! I just discovered a fun feature on my XM radio! You can plug in all your favorite stock tickers, and while you're listening to music, your tickers scroll across the bottom. Now you can see yourself making money on the gas you fill up with in real time! I'm pretty sure most XM and Sirius units have this feature.

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"Common sense is not so common." -Voltaire

Hambergler

Your right. It's amazing how programed my mind is on keeping my Roth money with an index fund. Never thought of it for swing trading.

My company matches 100% up to 3% with a 401k. So I first contribute 3% to the 401k. Then max out my Roth. Then max out my 401K.

I know it's more of a CPA question, and I'll leave my muddy shoes at the door from now on.

How do you mean offsetting loss? Doesn't seem fair that the government can share in my profit but not in my losses.

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leejo

*sigh*

leejo

I'm not sure I'm following. You pay capital gains tax on savings account interest. If you buy a CD, sell real estate for a profit, bonds, derivatives, or stocks - doesn't matter. Any increase in the value of the money you have gets taxed, with few exceptions. I guess a tax-free muni would be one I hadn't mentioned earlier.

What I meant about an offsetting loss might be explained easiest this way.

Bought 100 ABC @ 10
Sold 100 ABC @ 15
Capital Gain $500

Bought 100 XYZ @ 20
Sold 100 XZY @ 18
Capital Gain ($200)

So the net Capital Gain you have is $300. You had one trade that netted $500, and another trade with an offsetting loss of $200.

Hambergler

Your reading too far into it. What I meant was that I never considered my Roth to be potential platform for high risk activity until you brought it up. While it does shelter cap gains, it has been designated in my mind as a nest egg. It will take a considerably higher degree of comfort with the markets for me to change this perception.

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