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Selling stock

5,401 51 March 11, 2019 at 01:44 PM in Finance (4)
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I'm close to cashing in on Visa stock now that it has hit $150. I stand to make a very good profit on my original 10k investment.

I'm torn whether to sell the lot and enjoy my profit or hang on to a percentage. I'm selling because I feel the profit is good and I think a downturn is coming sometime this year. I have a large chunk of money in the market in other holdings so cashing out completely on this one is my hunch.

It's a long term gain so I know I'll pay less CGT. Is there any other tax issue I should be thinking about? I'm in CA so I think there is state CGT too.

What should I do with the cash? I don't have it earmarked for anything so I'd like to put it somewhere safe with some sort of return, any suggestions?

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#2
I thought the same on Friday when I sold MA. Hating myself today. I broke a cardinal rule. Sell the losers, not the winners.
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#3
Quote from shinyraindrops
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I thought the same on Friday when I sold MA. Hating myself today. I broke a cardinal rule. Sell the losers, not the winners.

Really? I've made a huge profit though. You can't ever make a profit if you don't sell.
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When the facts change, I change my mind.
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#4
it looks like a super good stock.I had drinks with some of its employees they hire geniuses.. theyvseemed over qualification for visa.
the only problem with visa is Kroger stopped use ng hem as fees were expensive.watch to see if others stop using them.
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#5
Quote from Grinner
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Really? I've made a huge profit though. You can't ever make a profit if you don't sell.
You can't go wrong taking a profit.

You cannot predict the market perfectly. If you guess the top or the bottom, that's all it was. There is never anything wrong with taking profit off the table. The worst thing that happens is that you don't make as much money as possible. You're smart enough to recognize that that isn't a problem.

The only thing I can think of (because it's CA) is the possibility that it's taxed as regular income instead of LTCG at the state level.....I don't know if that's a thing -- just one of those things that I'd hear and think "well, it's CA after all."

Here's what I usually do in your situation: I sell a certain amount for a nice profit. If I think that there's a good long term play, I keep some skin in the game. How much depends on my asset situation at the moment and the stock's dividend-- it can be anywhere from 10-50%. Then, I monitor the stock to see if it's worth re-buying on a future dip.

You hear stories about people who bought Amazon 20 years ago and never sold a single share until today. It makes for a nice story but those people are idiots. For every story like that, there's a SHLD or CSCO. Buying and holding a stock without ever taking a profit is a playing with fire. (I got burnt by ATVI by not listening to my advice.)

Stocks aren't for hindsight. You cannot play the market if you're going to look at your portfolio and say "oh man, if I only held XYZ for another year, I would've been a billionaire." Trying to hit home runs every time is way less effective than hitting singles and doubles. Once you're playing with house money (ie stock doubles so you sell half your position), you can't really make a mistake. It's just a matter of how much you win.
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#6
My first advice is don't think about it in terms of taking a profit. Think in terms of investment allocation. Do you have too much of your portfolio in one stock? Then sell a little to rebalance. There's no reason to feel like you need to "lock in" profits. All you're doing is redeploying your capital to other investments that may be less appealing and taking a tax hit to do it.

As for alternatives, why not simply a balanced mutual fund or etf? You may have a hunch about the market but that's a dangerous way to invest. You can sit in cash earning 1.5% taxable at ordinary rates for a long time while the market keeps rising. A 50/50 stocks to bonds fund would be a decent parking place for money you don't immediately need but where you want to reduce risk.

Finally, are you maxed out on your 401k and IRA options? Its none of my business but I see lots of people playing around with taxable accounts for no good reason when they aren't even using up their whole retirement contribution allotment for the year.
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Last edited by dukeblue219 March 12, 2019 at 06:33 AM.
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#7
Thanks for the replies.

Luckily I'm in a position where 401k money doesn't matter to me. I've got some cash in an employer fund that is doing well but I'm set for retirement with rental properties so the whims of the market are less of a concern for me.

I like Bonkman's advice to keep a bit of it. Holding $10,000 isn't a terrible thing to do since I don't need the money from selling. I'm only selling because I think it's a good move given my feelings on the future of the market as a whole.
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#8
OR you could sell enough to "recoup" (liquefy) your initial investment plus some margin (5%?). Then you've at least secured your capital.
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#9
Quote from Dr. J
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OR you could sell enough to "recoup" (liquefy) your initial investment plus some margin (5%?). Then you've at least secured your capital.
That's great advice. I've done that many times myself. I sell off to get back my investment and let the rest ride. It's the houses money at that point.
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#10
Quote from Grinner
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Really? I've made a huge profit though. You can't ever make a profit if you don't sell.
Common advice is to keep your winners and sell the losers. Since historically, winners keep winning. Losers keep losing. Your first loss, is your best loss.

Why didn't I sell BA instead of MA? Really regretting not selling BA yesterday after it halved it's losses.
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#11
visa went up over a $1 a day selling a good stock is only forn chumps
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#12
Some days ago I saw a post in bogleheads that linked a study comparing 1926 with 2012.

The market had a phenomenal gains, something like a few tens of thousand X or something.

However, the interesting thing is that only 4% of all the stocks traded in the market between this period led to ALL the gains.

How confident are you that Visa is in this 4% for the next 100 years?
How confident are you in your ability to predict the 4%.

If you are confident hold on to it for the next 100 years, else sell and invent in a simple index fund!!!
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#13
Quote from Dr. J
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OR you could sell enough to "recoup" (liquefy) your initial investment plus some margin (5%?). Then you've at least secured your capital.

Well I've made 10x my original investment in profit. The 10k original investment isn't really worth securing on it's own in my opinion. I think I'd rather take the profit and put it somewhere else.
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#14
I bought visa at $50
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#15
Quote from phillint
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I bought visa at $50
That's great. I got it at $14 so I feel I've held on long enough now.
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