Lesson 11: December Tax Strategy
LESSON 11: HOW TO SCREW THE GOVERNMENT 101!
Thanks to the lovely and talented Mr. Dave Zobel (NOSHUZ is his stock symbol), we have a topic for todays lesson without me having to think!
The strategy for December is essentially a taxes strategy. We don't want to pay a ton of taxes, do we? And we don't want the government to snag our profits right when we get them, we want to be able to use them! Then we'll pay our fair share later. When we're ready. :) So, our strategy in December is two fold:
1) If you have a stock that sucks, wait til one day in December and then pretend you're an Investor and SELL THE GARBAGE! Get rid of it! Take the cash you have left and run with it! That's what Investors do anyway, right? They buy a stock at $100, hold onto it til it hits $10 and then sell it because that's what Investors do. We do it because we get a tax write off by doing this in December. Your losses are tax write offs, so get those write offs now! We'll need them because by Trading the other 11 months out of the year we've made a crapload of money! Sell your lousy stocks and get your cash ready for buying in January.
2) We sell GOOD stocks, profit stocks, AFTER JANUARY 1st! This is very important. By doing that we don't pay taxes on our gains for 15 months! That's because income in January of 2006 isn't on your taxes until 2007 and you don't pay those until April of 2007. 15 MONTHS of using your tax money to make more money! That's a long time to be using the governments money to make more! So, I usually sell January 2nd and start the year new. That way I'm in an 80-100% cash position. Why is this?
Because EVERYONE who knows what they are doing (all 4 of us) does this and stock prices go down in January because of all of the selling and since we have CASH we BUY BUY BUY!
Here's an example of what I bought last January and where the stocks are at today:
1/3/03 - Disney (DIS) bought it at $17.26 it's now at $22.29 gain of 29%
1/21/03 - AMD (AMD) bought it at $6.12 it's now at $15.08 gain of 146%
1/21/03 - World Wrestling Entertainment (WWE) bought it at $8.00 it's now at $11.65 gain of 45%
1/21/03 - XM Satellite Radio (XMSR) bought it at $4.22 it's now at $22.85 gain of 441%
Wouldn't you like to see your gains be like the above? I had those gains this year and guess what? I sold a few shares along the way the whole way, so I don't have 100% at risk and I still have shares of each of those companies. I would have made a few more dollars if I had held all the shares, but I'd also have no cash for buying other stocks and I'd be 100% at risk to lose 400% gained income! That's stupid! Don't be greedy! Take your profit and be happy. Most mutual funds lose money. The best make 20% a year. Peter Lynch averaged 27% a year, I'm around 40% this year with my system.
Get the idea? January everyone is selling to keep their gains tax free for 15 months, so we buy up the stock in January and watch our profit roll in!
Thanks for the topic Dave! If anyone else has questions, topics, anything, email me steve@thetestingguys.com and I'll get on it.
Thanks to the lovely and talented Mr. Dave Zobel (NOSHUZ is his stock symbol), we have a topic for todays lesson without me having to think!
The strategy for December is essentially a taxes strategy. We don't want to pay a ton of taxes, do we? And we don't want the government to snag our profits right when we get them, we want to be able to use them! Then we'll pay our fair share later. When we're ready. :) So, our strategy in December is two fold:
1) If you have a stock that sucks, wait til one day in December and then pretend you're an Investor and SELL THE GARBAGE! Get rid of it! Take the cash you have left and run with it! That's what Investors do anyway, right? They buy a stock at $100, hold onto it til it hits $10 and then sell it because that's what Investors do. We do it because we get a tax write off by doing this in December. Your losses are tax write offs, so get those write offs now! We'll need them because by Trading the other 11 months out of the year we've made a crapload of money! Sell your lousy stocks and get your cash ready for buying in January.
2) We sell GOOD stocks, profit stocks, AFTER JANUARY 1st! This is very important. By doing that we don't pay taxes on our gains for 15 months! That's because income in January of 2006 isn't on your taxes until 2007 and you don't pay those until April of 2007. 15 MONTHS of using your tax money to make more money! That's a long time to be using the governments money to make more! So, I usually sell January 2nd and start the year new. That way I'm in an 80-100% cash position. Why is this?
Because EVERYONE who knows what they are doing (all 4 of us) does this and stock prices go down in January because of all of the selling and since we have CASH we BUY BUY BUY!
Here's an example of what I bought last January and where the stocks are at today:
1/3/03 - Disney (DIS) bought it at $17.26 it's now at $22.29 gain of 29%
1/21/03 - AMD (AMD) bought it at $6.12 it's now at $15.08 gain of 146%
1/21/03 - World Wrestling Entertainment (WWE) bought it at $8.00 it's now at $11.65 gain of 45%
1/21/03 - XM Satellite Radio (XMSR) bought it at $4.22 it's now at $22.85 gain of 441%
Wouldn't you like to see your gains be like the above? I had those gains this year and guess what? I sold a few shares along the way the whole way, so I don't have 100% at risk and I still have shares of each of those companies. I would have made a few more dollars if I had held all the shares, but I'd also have no cash for buying other stocks and I'd be 100% at risk to lose 400% gained income! That's stupid! Don't be greedy! Take your profit and be happy. Most mutual funds lose money. The best make 20% a year. Peter Lynch averaged 27% a year, I'm around 40% this year with my system.
Get the idea? January everyone is selling to keep their gains tax free for 15 months, so we buy up the stock in January and watch our profit roll in!
Thanks for the topic Dave! If anyone else has questions, topics, anything, email me steve@thetestingguys.com and I'll get on it.
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