Tag Archives: gld

Selling GLD *Before* My Profits Are Too High

I’m not a day trader, or even a month trader. But I’ve started to realize if I want my portfolio to have any serious upside, I need to rebalance every now and again. I’ve sold off most of my cleantech investments including PBD, ENOC, and COMV, and put that money into a mix of large-cap tech companies (AAPL, CSCO), international funds (HAO, EWZ, EDIV), and food (MCD, CBOU, SBUX, WFM.)

Up until today, I’ve only sold small cap losses that seem to be destined for failure or, at best, growth after years of retreating even further, while that money could be in a large-cap dividend stock earning income. Today, however, I decided to sell one ETF where I have turned a profit.

So long GLD, at least from my taxable account. After making an early $500 investment in GLD I found out that gold, even in an ETF, is taxed at a collectors rate. That means 28% capital gains tax. Instead of letting my $500 sit in my taxable account (it is at about $900 now) I’ve decided to sell the 5 shares and move my investments into other funds that belong in my taxable accounts. And after today’s AAPL earnings news, I’m tempted to put the $900 into purchasing two more shares of the company that made the computer I’m currently writing on and the phone I’ll be making calls on in a few minutes. I only own 70-some odd shares of AAPL stock, my goal is to get to 100 shares before the company hits $500 a share. Since AAPL doesn’t pay dividends, this is the perfect company to hold in my taxable accounts.

Meanwhile, I invest regularly in GLD in my Roth IRA account. It seems GLD is fairly expensive right now (afterall, I nearly doubled my initial investment from just a few years ago) so I might hold on aggressively investing in it. My Roth account is my “play” account, since I can only put $5k in it per year. I put that mostly into high-dividend ETFs and rebalance by adding more funds in new sectors the following year. For instance, this year I’ve already invested about $2k into XLE (oil) and XRT (retail companies) as well as GLD. I only have $3k left for my Roth this year, but I plan to start contributing to my 401k (no match) soon, and trying to max that out this year. I’m hoping for a significant raise, which in the ideal world will be enough to cover maxing out my 401k without noticing those contributions too much, but I’m not sure yet if that’s actually going to happen. Fingers crossed.

In the meantime, I have $900 liquid that I can invest somewhere. Oh goody. I think it’s pretty crazy that I currently have $149339.25 in my investment accounts right now, not counting about $10k liquid (though taxes are going to eat some of that up I think.) Even though $150k doesn’t seem like a lot of money, I’m proud that in the last 6 years since I’ve graduated college I’ve been able to go from $5k in savings to over $160k. Still pushing for that $200k this year — if the economy decides to recover and I manage a sizable raise it will help lift me up there, otherwise I’ll probably end up at $180k for the year. Really would like to see that happen, I’m so set on entering my 30s with $250k in the bank, I’ll be pretty peeved at myself if I don’t make that goal.

My highly unscientific stock investing method

A few years ago, I opened a Sharebuilder account to test the waters on buying ETFs and individual stocks with my $50 or so a month of leftover savings once I maxed out my Roth IRA. Investing $50 here or there into stocks like MCD and GOOG gave me a little rush… as they were riskier than the index funds the remaining $5k went into every year.

Since I opened the account in 2008, that account has amassed $53.6k in investments. I’ve watched the account lose 30% of its value during the great recession, kept investing at the market lows in stocks that seemed cheap, watched my account hit 25% profit, and return to 7%. Needless to say, my “for fun” stock and ETF account really has way too much money in it now to be “for fun,” but I’m not sure what to do about it.

For what it’s worth, many of my investments are in ETFs or very large companies that tend to be stable investments. I have 24 different ETFs and stocks in the account, including AAPL, AMZN, AND, COMV, CSCO, ENOC, EPI, EWZ, FTR (this was a split from VZ and I own like $3 of it), GE, GLD, GOOG, IHI, JNJ, KOL, MCD, OSTK, PBD, PG, T, VWO, VZ, WFMI, and XLF. (Recognize any of those?)

The worst performing by far is COMV, which is a small cap cleantech stock that has been all over the map. It’s doing really poorly right now so part of me is tempted to sell and part of me is tempted to wait and another part of me wants to buy more because based on my limited knowledge of the company, their history and potential, it seems like it’s cheap at the moment… and even short term it will probably move up again from where it’s at now. I don’t base this on any stock charts so really I don’t know. Shares are about $4.50 right now, my avg purchase price was $6.50, and I own around 700 shares.

On the other end of the spectrum, AAPL has performed very well, but it is SO expensive. I started investing when it was $250 a share, and now it’s around $340 a share. Along the way I’ve accumulated 70 shares of the stock, which really isn’t a lot given stocks don’t just keep going up and up once they’re so far up (do they?)

I’m probably most excited about AND, IHI, VWO and XLF. I wish I bought more WFMI for the long time it was doing poorly and my stock in it was down something like 60%.

I really don’t own a lot of shares of any one stock… COMV with 667 shares is my largest ownership from a sheer number perspective. Next up in my list, XLF, with 281.7 shares. Then VZ at only 119.59 shares. Needless to say, since this is just my Sharebuilder account (not including my Sharebuilder IRA, my Roth IRA and Vanguard accounts, or 401k from my last company) I’m likely over diversified and making poor investing decisions.

The way I look at it, though, is that at least I’m investing. It would be so easy to take that money and throw it away on a nicer apartment or other things I don’t need. At least in the stock market there’s a chance I’ll have some compound interest value on it over time. Then again, it’s extremely risky to put my money in the market this way… even though I am “buy and holding” I’m riding the same market that everyone else who is shorting and buying options and doing all those complicated investing things that I don’t understand in. So it’s hard for a novice like me to even understand what it all means, other than to put my money on as many spots on the roulette wheel as possible, and sit back as it spins.

Is this a terrible investing strategy? Do you have any advice for me?

Recession? Depression? Either way, it sucks.

I know, I know, I know that investing is a long-term investment. Turning 25 next month, I’ve got plenty of time to recover. Still, watching the money I put in stocks over the last two years completely tank is a pain in the ass. I’ve lost about $5000 thus far out of maybe $23000 total invested. I can only imagine how painful this all must be to people who have even more money in investment accounts, esp if they’re closer to retirement.

Me… well, I’m trying really, REALLY hard to try to view this as an opportunity. The key word is actually trying. It’s hard. While my sharebuilder stocks are being hit the worst, my Vanguard funds aren’t doing much better. According to my Vanguard account…

So I’ve invested about $13,200 in my Roth IRA and non-IRA Vanguard accounts. The value of these accounts is $8966. Yikes!

Vanguard Losses: about $4000. -22% in this year alone.

I’m not pulling my investments out, however I realize that while this recessdepression isn’t going away anytime soon, my money just may be going, going, gone.

Sharebuilder is even scarier. Really scary.

How scary, you ask?

Well, what better to do at 2:30am than to make a chart of my total investments throughout the last year versus their current worth. I’ve been bad about tracking my Sharebuilder investments because i’d put a few hundred dollars into it per month as an experiment, hoping that it would make me some money, but not enough to completely destroy my life if the “experiment” failed. I’m still not sure if this experiment is a failure, since I plan to go long on all of these. I’m tempted to buy more of some of them now, or soon, but I’m also tempted to stay out of the stock market outside of my Roth IRA for the foreseeable future.

Of my total 9 investments in my Sharebuilder account, only one of them is currently “up.” That’d be my McDonalds stock. I paid $181.22 for what’s currently worth $190.

But that’s the only good news in an otherwise bleak account. Overall, the entire account is down 32%. Not surprisingly trending with the stock market, it’s gone from a 17% loss to a 32% loss in just two weeks. It was last “positive” in May, when it was up 2%. Since then, it’s just been sad to watch my stocks suffer.

Looking at the last two weeks, the hardest hit stocks & ETFs were PBD, EPI, and EWZ. I guess my other stocks had tanked deep already, while these were really hit by the lastest turmoil after surviving the earlier mess.

*EPI (india ETF)
of $372, I was down $62 two weeks ago. As of today, I’m down $130, or 35% of that investment.

*PBD (cleantech index)
of $356, I was down $70 two weeks ago and I’m down $167, or 47% of my initial investment today.

*EWZ (brazil ETF)
of $245, I was down $62 two weeks ago, and I’m now down $126, or 51% of my total investment.

SHAREBUILDER OVERALL
PERFORMANCE 2008

Total Investment: $2158
Current Value: $1465
————————-
Current Loss: -$694


March -2.2%
April -2.4%
May 1.2%
June -2.1%
July -5.8%
August -9%
Sept -21.6%
Oct -32%

Sharebuilder Experiment — An Expected Failure?

My Sharebuilder account is down about $134 right now, and I doubt it’ll enter an uptrend anytime soon.

The biggest burner is one stock pick – COMV – that I bought a measly 4 shares at for $29 a piece. Those shares are now worth about $10 a piece.

Meanwhile, GLD, the “gold ETF,” which was actually doing very well a few weeks ago, is now “correcting” itself, and I’m down $30 on that investment. $30 isn’t bad, but I have a feeling that it will be a while before GLD hits $100 a share again. I think it will, one day, given that every so many years the economy looks bleak and people start to pour money into gold. I don’t know if it will ever go beyond that. I don’t know how long it will take to get there again. I don’t know how much money I’ll “lose” in the meantime. I see people saying GLD could be worth $70 a share or less. That’d be a “big” loss. I own about $500 worth – 5 shares. So a $30 drop per share would be a $150 loss.

I guess that’s not that bad. If I want to hang on to GLD as a backup. It’s supposed to be “insurance” in a portfolio. Of course, most people say it should be in metal form, not paper. But GLD is kind of like owning the metal, right? It’s investing in the bullion anyway.

I wonder if I should have sold GLD when it was up to $100 a share. I would have made a nice little profit of $47 at its highest… which would have been better than losing $300. Much better.

I’m happy to hold on to all of my investments for many years. I’m trying to invest and then “forget” about my investments, even though I follow how they’re doing, but as soon as I put my money into that account I pretend it’s play money so I don’t have to worry about it. Maybe that’s an awful investing strategy?

Regardless, I stopped investing in GLD. The $500 is enough of my portfolio at the moment to devote to that.

Meanwhile, I’ve started diversifying a bit more. Away from GLD and away from individual stocks. Right now my Sharebuilder portfolio is:



GLD: $507.10 (5.8 shares)

BMXX: $251.83 (money market)
EWZ: $244.33 (3.08 shares)
MCD: $194.83 (3.41 shares)
PDB: $163.46 (6.2695 shares)
KOL: $109.10 (2.88 shares)
WFMI: $106.01 (3.069 shares)
EPI: $105.73 (4.48 shares)
XLF: $69.65 (2.65 shares)
COMV: $43.48 (4 shares)

You Can’t Scoff at Deal or No Deal if you Play the Stock Market

Have you ever watched Deal or No Deal? If so, how frustrated do you get when the contestant is offered a really good amount from the banker and then the contestant goes on to play against the odds and ends up with a measly ten bucks?

Watching the show it’s easy to think, gee, this person is an idiot. But how different is that from playing the stock market?

Of course, stocks have a lot more math to them. The odds aren’t so clear cut. Each company has its own risks and it’s own potential for success.

But when it comes down to it, you either believe in a company or you don’t. You believe that in box #1 there is a goldmine and you stick to your gut or you change your mind and hope you’re right.

Obviously you can’t control the stock market, but I never realized just how vulnerable it (and the American dollar) was until recently with this huge recession going on.

I can’t figure out if my stock investments are bad choices or if the recession will just have to work through my piggy bank before my stocks can start growing, and hopefully returning to their investment value and exceeding it. Still, I have my doubts I’ll see that money again.

As I’ve said earlier, my Sharebuilder account is where I can play the stock market for the long term. I’m not day trading… which maybe is a bad thing, given the recent performance of my GLD holding. It was up to over $100 a share just a day ago and now it’s down to $93 a share. My $49 profit has widdled away to $6, and I wouldn’t be surprised if it goes negative soon either.

Meanwhile, all of my other funds are performing miserably. One of the other reasons I started my Sharebuilder account is to diversify my portfolio internationally. I’ve got random bits of stock in Brazil, India and the rest of Asia (coal and cleantech stocks) — all ETFs. I’m hoping that if the US crashes and burns maybe these other economies will survive and even grow. I believe that the future for the US economy may not be so bright. China and Asia are gaining power by the millisecond. I can’t imagine that the US will be able to keep up. I think over the next century the US is going to lose some of its superpowers, for better or worse. I believe there’s going to be a big war at some point down the road that’s going to hit all of the world’s economies much worse than the Iraq war. There will probably be more attacks on America, and there will be a third world war. I just don’t see how it’s possible to avoid it. Scary, but I think it’s probably true.

Of course war times, historically, are usually good for the economy, right? Well, except this Iraq war doesn’t seem to be living up to that. So I don’t know. I can’t really guess the future, but the way the world is right now, and the way people are so stupid and stubborn and violent, I can’t see us avoiding some huge conflict for much longer.

I’m not sure how that will effect my stocks. If I survive through such a war… maybe a diversified portfolio will be a good thing to have?

What to do about GLD?

A few months ago when I dove into the market with idealism and ignorance, I wanted in on all this gold excitement in the market. I believe the market is tanking, a recession is inevitable (if not already happening) and gold will do well for a while. I believe, and largely still believe the hype.

However, what I didn’t realize at the time (damn me for not reading the prospectus or understanding tax law) is that GLD, being as it actually means I hold a small tiny piece of actual gold, is considered a collectible by the IRS.

Why does that matter?

Well, normal long term capital gains are apparently taxed at 15 percent, which is actually pretty nice given that you can make a lot of money in the stock market, and as long as you hold your stocks for a year you only have to pay the 15 percent tax.

However, GLD, the “collectible,” is taxed at a rate of 28 %.

Oy!

So now I’m trying to figure out what to do with the GLD stock in my Sharebuilder account.

I understand the long term capital gain tax, but I’m still unclear what the gains would be taxed at if I cashed out in less than a year. I’ll probably want to do that anyway given that gold’s price will hit the roof at some point, the dollar will recover with the new president coming in (hopefully) and I can sell off the gold.

But what rate will GLD be taxed at if I sell it within a year?

Also, I’m buying it about once a month in smallish increments. Right now I own about $470, or a little less than 5 shares of GLD. As of today, the account has a net profit of $34. To sell it, though, would cost $10. So if I sell today, I made $24. But that $24 will be taxed. What rate would it be taxed at?

When it comes to long term capital gains, is the “one year” policy based on when you bought each share? What if I bought a part of a share per month? When can I sell to get the long term capital gains tax instead of the short term tax? And would I want to wait or sell sooner for my GLD holdings?

Can someone explain this to me…?