Investment BS Thread - Stocks/Futures/Mutual Funds/Bonds/Commodities/Options/ETFs/401ks/Etc

Dang really? I thought $10 was realistic if held longer. I may just have to eat this

 

The sooner you bite the bullet, the sooner you can put the salvaged money to work. That's how I do it at least. I have no qualms in taking losses that need to be taken.

 

Its tough, I’m looking at a $5K loss if I sold now

 

Over $11k realized losses for me this year, mostly due to mortgage REITs. No regrets really with my decisions, a lot of unrealized gains. That $5k you're sitting on could become $10k, that's how I'd try to see it.

 

I like you’re attitude

 

Oh, if you're in the 20% tax bracket (just an example), you can write off $3,000 (saving you $600) on this year's taxes, and $2,000 (saving you $400) next year. So you'd recover $1,000 over the next 2 years by taking the $5,000 loss, making it a $4,000 loss. It would be more if you're in a higher tax bracket. That helps me a lot with taking losses.

 

That’s never fun. The only positive is it will be a little easier for NRGU to gain $1 per share than to lose $1 per share at this point. If that keeps you warm at night

 

Had no idea thanks! I have a lot to learn in investing lol

 

@rmepilot i think you were the TW mastermind behind NRGU what did you end up doing with it?

 

Well the reason I asked you was because you brought it up a few months ago. I currently have a ton or reits and energy, natural gas, pipeline, and fuel storage stocks.
I really want to diversify more, but all of these companies pay a HUGE dividend compared to other sectors (as least to all of the ones I have seen).
Do you have any suggestions outside of these sectors I already own?

Edit: I have plenty of bank stocks and insurance as well. I guess all that leaves is consumer goods and entertainment?

 

I get that mentality, I really do.
"It's not a loss until I sell"

But.... if (note the "if") you could take the money you'd have buy selling and make money with it, then holding on to the loser isn't just costing you the $5k loss, there's also the opportunity cost of the potential gains on the money.

Basically, my opinion (and it's easier said than done sometimes) is that no investing decision should ever be based on past performance. If you have $1000 dollars in XXX, you should leave it in there only if you would buy $1000 of XXX today. If you wouldn't buy $1000 of XXX today, then sell. Whether you gained, lost, or broke even since you initially bought it, has no bearing on if it's a solid investment TODAY at TODAY's price.

 

One of my favorites is ABBV. It has a high yield, has appreciated about 20% since I started buying it about 2 years ago, and is a Dividend Aristocrat. It's rare to find something like this in the healthcare sector. Same thing for AVGO, a tech company with a high yield and good growth. I like oil stocks (most don't seem to), I have CVX, XOM, and ENB. Another healthcare company is PFE.

 

The basic way to explain it is you can write off up to $3,000 of realized losses per year on taxes, and carry over any other losses until you've written it all off (I don't think it ever expires).

 

Look at Natgas prices and then look at 3x leveraged ETF.

Natgas hit a short term peak in May at 2.00. Three months later, now it's at 2.38. That's about 20% gain.



Now look at the comparative 3x ETF (UGAZF). Same time period, down 45%.



Even UNG, a 1x ETF, is underperforming actual natgas prices. It is down 7% over the same time period.

These types of instruments are amazing if you are an expert bottom-catcher. If not, you may be hosed. Either you are hosed from it going further downwards, or you are hosed by daily market choppiness, in which case if you hold for more than say, a month, your chances of a winning trade start getting smaller and smaller.

There is a reason these instruments have to have reverse splits very often.

I tried to play this game with these ETFs for a while, and what I found was I would initially win big (sometimes!) and then if I held beyond that, I kept having to throw more and more money at my position to try to make up for my losses. What I realized was that this was not a winning strategy. When you trade these things, you need to decide quickly to sell, whether or not you win, it doesn't matter. Time can and will work against you if you sit on the fence. If you are good at finding pivot and momentum shifts, then you stand to make a lot of money, but very rarely do the markets just turn around and go up/down every single day for days on end, and that's what makes it difficult.

 

Wow it makes so much sense now! Thanks for taking the time to do those drawings. I remember back in June when NRGU hit close to $8 and I was an idiot and held. Kept telling myself “it’ll go up” when it started going down little by little and before I knew it, it was in the $3-4 range. I like the idea of leveraged funds though, but will def be more cautious in the future

 

Yes, if you are good at spotting momentum shifts, then you could make a good bit of money, but I would not hold for more than a week, personally. It's much less stressful for me to trade actual companies now though... since I don't have to worry about decay anymore lol

 

Do non-leveraged ETFs decay? I never even thought about it because I didn't buy ETFs, but I have a lot of SPHD now.

 

it seems like they do, but you'll want to compare long term charts with the underlying securities to make sure. For instance, UNG is non-leveraged and still decays because it simply follows % change daily. Following % change daily means that it will approach zero if it goes up 5% one day, down 5% the next, and that process repeats over and over.

If a stock is $100, goes down 5%, now it's $95. If it goes up 5% the next day, it's only at $99.75. I have seen where the underlying security is just a little off of the ETF as far as % gains, and that may have to do with the after-hours moves, which is when things start to go way off.

 

I think SPHD owns the underlying assets, if that makes sense. I wouldn't think that issue (which I understand) would happen if they're essentially a holding company for actual shares. I may be wrong though.

 

Yeah, it's always good to read the prospectus with that type of stuff lol