Business, Economics, and Taxes: Capitalism. Yay? >=(

[dxmnkd316]

So far, all of my investments are in 401k, IRA, etc, so I'm totally ignorant on how trading actually works, but if they plowed those winnings into other losses in the same tax year, doesn't that cancel out and they owe no taxes? And isn't there even some sort of option to carry those losses forward to future tax years in the event that you're already "good" for this year (e.g. if losses exceeded wins, you could use the net to offset next year's income)?

Edit: ah, I think if they don't realize those losses this year, though, then they are screwed, because they still owe the taxes from realizing the wins. So they'd have to "sell low" enough stocks to cover those losses if they don't have the cash to pay the taxes - but if they don't notice this situation before December 31, then it might be too late and they will be truly screwed.

I'm wondering how many of them sold some shares at a loss and then immediately bought back some of those shares within 30 days. Have fun with the wash sale rules.

 

[Kepler]

I was thinking they went out and bought 100 top of the line sex dolls, or they donated all their money to Dump.

 

[Handyman]

wsb wants it at a dollar.

Do you ever get the feeling the entire global economy is a bubble?

All the time. That is why it is fun to play if you have nothing to really lose. This is like casino gambling to me...the entertainment I have had watching this is worth it even if Doge collapses. To go from weeks of being in the red to having it almost triple in 72 hours is just awesome to be a part of!

The problem is the people who put a lot of value into it. That is where wsb is kind of dangerous. There are people that see that and think they can turn their tuition into generational wealth. They buy with high risk and often on margin. When they lose they are fucked. Never put into play more than you can afford to lose. (the banks never learn this lesson either)

 

[Handyman]

I bought some for the hell of it when they started pumping it and the "DOGE to $1" memes started. Now I wish I bought more...

Yeah I said that to my buddy yesterday. (he actually accidentally doubled up when he bought originally) As soon as it hit $.07 I should have doubled up but that is fine.

 

[LynahFan]

I was thinking they went out and bought 100 top of the line sex dolls, or they donated all their money to Dump.

Ah, when you said "lost" I assumed you meant on other trading. Your scenario is just as likely.

 

[Handyman]

I was thinking they went out and bought 100 top of the line sex dolls, or they donated all their money to Dump.

Hey leave Ron "Q is CodeMonkeyz, Codemonkeyz is Q" Watkins out of this!

 

[FadeToBlack&Gold]

Edit: ah, I think if they don't realize those losses this year, though, then they are screwed, because they still owe the taxes from realizing the wins. So they'd have to "sell low" enough stocks to cover those losses if they don't have the cash to pay the taxes - but if they don't notice this situation before December 31, then it might be too late and they will be truly screwed.

This is correct. Even better, they will be subject to the higher short-term capital gains rate since they held the stocks for less than a year.

Lots of amateurs are going to be crying about not getting a tax refund next year because of the capital gains.

 

[Kepler]

All the time. That is why it is fun to play if you have nothing to really lose. This is like casino gambling to me...the entertainment I have had watching this is worth it even if Doge collapses. To go from weeks of being in the red to having it almost triple in 72 hours is just awesome to be a part of!

The problem is the people who put a lot of value into it. That is where wsb is kind of dangerous. There are people that see that and think they can turn their tuition into generational wealth. They buy with high risk and often on margin. When they lose they are fucked. Never put into play more than you can afford to lose. (the banks never learn this lesson either)

The banks don't have to learn it. Privatize profit, socialize loss.

 

[Handyman]

Yeah...moral hazard is a joke.

In other news: https://twitter.com/NPR/status/1382729452849926145

Signs of an economic boom are emerging — as retail sales soared nearly 10% in March, and weekly unemployment claims dropped to a pandemic low.

I assume we are minutes away from hearing about how we need to give all the credit to the GOP OR how the unemployment numbers are bogus based on some weird metric no one has ever heard of. Meanwhile those of us in the real world see how people getting vaccines is better for the economy than denying a disease exists or is deadly.

 

[BassAle]

I'm wondering how many of them sold some shares at a loss and then immediately bought back some of those shares within 30 days. Have fun with the wash sale rules.

there was one guy that ended up with a tax bill in the hundreds of thousands of dollars because he kept trading the same couple stocks all year and held them past end of year, so he was unable realize any of his losses due to the wash sale rules. He actually only made a profit of like $50K, but his tax forms showed he had over a million dollars in sales. If he had sold before the end of the year he would have been fine, since the the losses were reflected in the cost basis of the stocks he held.

oops

 

[dxmnkd316]

there was one guy that ended up with a tax bill in the hundreds of thousands of dollars because he kept trading the same couple stocks all year and held them past end of year, so he was unable realize any of his losses due to the wash sale rules. He actually only made a profit of like $50K, but his tax forms showed he had over a million dollars in sales. If he had sold before the end of the year he would have been fine, since the the losses were reflected in the cost basis of the stocks he held.

oops

I screwed up last year when selling stock. I had a couple lots that were hopelessly underwater and sold them off to help pay for the wedding. I figured I'd be able to write off those losses. Not knowing I was a moron, my brokerage let me know after the fact (since I bought more of my company's stock in my ESPP that next month). So I started reading up on the rules and I'm still not sure I fully understand them. I think I'm going to come out ok in the long run since, as I understand it, the loss is just added to the basis of the other lots. If I hold those long enough for them to be qualified, the increase in basis will offset some or all of the unusable losses for 2020. So, in the long run, it's.... about a wash.







I think.

 

[Kepler]

I screwed up last year when selling stock. I had a couple lots that were hopelessly underwater and sold them off to help pay for the wedding. I figured I'd be able to write off those losses. Not knowing I was a moron, my brokerage let me know after the fact (since I bought more of my company's stock in my ESPP that next month). So I started reading up on the rules and I'm still not sure I fully understand them. I think I'm going to come out ok in the long run since, as I understand it, the loss is just added to the basis of the other lots. If I hold those long enough for them to be qualified, the increase in basis will offset some or all of the unusable losses for 2020. So, in the long run, it's.... about a wash.







I think.

Considering I couldn't even follow what you just said, I should never ever buy stock.

 

[Kepler]

not WSB. You're not allowed to talk about crypto on r/wallstreetbets

Reference.

 

[Handyman]

Doge to $.17!

 

[dxmnkd316]

Considering I couldn't even follow what you just said, I should never ever buy stock.

The most basic and reliable advice I can give: Buy low cost broad index funds (VTSAX), hold them for a long time in tax-advantaged accounts (401(k), IRA, etc.), ignore the rest.*
(One step further in complexity would be to diversify your tax exposure. Roth vs. Traditional vs. Brokerage)


If you want to play with the market, treat it like a casino. Stick to the simple games (NYSE or NASDAQ listed stocks only, no options), commit a defined small amount of money that you're willing and able to lose, enjoy the ride. You can also do the same with fantasy stock market games where you get fake money to play with. :-D




*My dad has told me this is what Buffett had in his will for how to manage the money for his wife should he die.

In his 2013 letter to Berkshire Hathaway shareholders, Mr. Buffett described how he has advised trustees to manage the money he will leave to his wife:

"Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors - whether pension funds, institutions or individuals - who employ high-fee managers."

 

[Handyman]

Yeah Vanguard's are always solid. Schwab has a few that have always done right by my retirement as well. Always look for the long term if you are looking for massive growth in the short term you might get lucky a few times but you will lose your shirt more often than not.

Of course who needs any of that...DOGE AT $.19!!

 

[BassAle]

Reference.

i missed that they lifted the crypto ban, and then reimplemented it after the Bloomberg article! That’s what I get for abound WSB for the last few weeks.

 

[BassAle]

Yeah Vanguard's are always solid. Schwab has a few that have always done right by my retirement as well. Always look for the long term if you are looking for massive growth in the short term you might get lucky a few times but you will lose your shirt more often than not.

Of course who needs any of that...DOGE AT $.19!!

So is it time to dump my DOGE? I expect a bunch of people will cash out soon and I could buy back after the dip.

 

[Handyman]

No one will cash out yet...not when you have Cuban and Musk saying "TO THE MOON!". Newbs are starting to get in on it which is why even after it dipped yesterday it rose hard again today.

I mean I guess it depends how much you bought and at what price. I woudn't dump all of it though. Sell enough to make a nice profit and hold enough that you can still have fun in the game!

 

[Kepler]

The most basic and reliable advice I can give: Buy low cost broad index funds (VTSAX), hold them for a long time in tax-advantaged accounts (401(k), IRA, etc.), ignore the rest.

That's what I do. I have a 401(k) through my work that is 60/40 bonds/sticks, where the stocks are mostly large cap with some small cap and international. I ran it as 70/30 stock/bond for 20 years, then switched over during the worst days of the Dumpster when it looked like Honduras was going to be able to buy us, and now I'm staying conservative because (1) I'm old and (2) even I know Wall Street is headed for a massive correction.