Mad Money Machine

Any Parentheses or Horizontal Lines?

Time to take a look at your taxable account to see if you see any parentheses or horizontal lines. Go over to the $Gain/Loss or %Gain/Loss column and if you see any numbers that have parentheses around them like this ($1,000) or horizontal lines in front of them like this -$1,000, then it may be time to sell them.

Why?

Because when you do your taxes you can take the loss and deduct it from your gains (supposing you’ll have some gains that is!).

Only sell if you think the stock won’t go back positive within 30 days. If that’s not the case… SELLLLLL!

For example, today I sold Yahoo! (YHOO). I really like the company and the long-term outlook, but I was down 7% from where I bought it and I don’t believe it will climb 7% before June 18th. Even if things started to go back up tomorrow, I could just roll the money over into some other company in the same sector (say GOOG or EBAY) and try riding it back up that way. You see, if I were to sell YHOO and buy it back within 30 days, I can’t deduct the loss on my taxes. So I either stay in cash, buy something else, or wait 31 days.

Of course if your stocks are in an IRA acccount then I have one word: nevermind.

The harder question is…. when do you sell a stock that is going down but your $Gain/Loss column still is positive?????