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  • Re: TG Fantasy Stock Market League

    Originally posted by leejo View Post
    You pay cap gains tax on your net. This is why people will often close out losing positions at the end of the year to offset a portion of their ganes. Sell on 12/31 and you deduct your losses from your profits on 4/15. Sell on 1/2 and you have to wait FOREVER to get any tax benefits.

    I try to talk all of my friends into opening ROTH Iras. Assuming your qualify to open one, which is likely, you can put either 5 or 6 grand into a ROTH annually (the cap just went up this year from 4).

    The sweet thing about a ROTH that differentiates it from other IRAs is that you can always take out what you put in without penalty AND you pay no capital gains tax on your earnings.

    In other words, if you add 5k to your roth, and by investing wisely grow that to 7k, you can still pull 5k out without penalty.

    The downside is that you cannot deduct your losses, which should affect your investing and trading strategies and actions. In other words, you need to be making more long term, lower risk investments in ROTHS, same as any IRA.
    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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    • Re: TG Fantasy Stock Market League

      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.
      A policy of freedom for the individual is the only truly progressive policy. -F.A. Hayek

      "$250,000 a year won't get me to Central Park West."

      Comment


      • Re: TG Fantasy Stock Market League

        Buy 200 Gamestop (GME) @ $56.34. Didn't have time to add this earlier today.
        [squadl]
        "I am the prettiest african-american, vietnamese..cong..person." -SugarNCamo

        Comment


        • Re: TG Fantasy Stock Market League

          Originally posted by xTYBALTx View Post
          Buy 125 shares of Honda (HMC) @ Market

          This taps me out - I'll have $119 in cash after my trades are executed tomorrow.

          ST -

          I'm just using the main stock trading page and selecting "Short" instead of "Buy." I'm not bothering with any stop loss: Go big or go home!
          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
          Last edited by Hambergler; 04-25-2008, 05:22 AM.

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          • Re: TG Fantasy Stock Market League

            Originally posted by Hambergler View Post
            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?
            Yes, by placing money in a Roth you are sheltering any of that capital's gains from tax.

            Originally posted by wiki
            Transactions inside the Roth IRA account (including capital gains, dividends, and interest) do not incur a current tax liability. Withdrawals are generally tax free when the account has been opened for at least 5 years and the owner's age is at least 59 1/2.
            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.

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            • Re: TG Fantasy Stock Market League

              Originally posted by leejo View Post
              Good point. There's absolutely no reason for anyone in these forums to worry at all about capital gains taxes. After all, you're not "rich" are you? That's a tax on the rich.

              /sarcasm
              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!"
              "Common sense is not so common." -Voltaire

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              • Re: TG Fantasy Stock Market League

                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.

                Comment


                • Re: TG Fantasy Stock Market League

                  Bought 100 MON @124.96

                  Comment


                  • Re: TG Fantasy Stock Market League

                    Sold 50 GS @ 192.26

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                    • Re: TG Fantasy Stock Market League

                      Short 100 CENX @ $68.43
                      [squadl]
                      "I am the prettiest african-american, vietnamese..cong..person." -SugarNCamo

                      Comment


                      • Re: TG Fantasy Stock Market League

                        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.
                        "Common sense is not so common." -Voltaire

                        Comment


                        • Re: TG Fantasy Stock Market League

                          Originally posted by leejo
                          Yes, by placing money in a Roth you are sheltering that much money from capital gains tax.
                          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.

                          Originally posted by leejo
                          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.
                          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.

                          Originally posted by leejo
                          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.
                          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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                          • Re: TG Fantasy Stock Market League

                            Originally posted by Hambergler View Post
                            YDoesn't seem fair that the government can share in my profit but not in my losses.
                            *sigh*

                            Comment


                            • Re: TG Fantasy Stock Market League

                              Originally posted by Hambergler View Post
                              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.
                              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.
                              Last edited by leejo; 04-25-2008, 06:19 PM.

                              Comment


                              • Re: TG Fantasy Stock Market League

                                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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