Stock Conundrum

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PJR202
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Joined: Sat Nov 11, 2017 11:12 am

Stock Conundrum

Post by PJR202 » Fri Feb 09, 2018 10:21 am

To keep this brief.

I have 1200 shares of Verizon stock in my 401k, which is just a bit of a quarter of my overall portfolio. We got a notification late last year that Fidelity was getting out of Verizon and we needed to sell, move, or redistribute any remaining Verizon stock. It's a former employer and most of my coworkers already took care of this years ago. It was crushing me last year and I didn't realize it. Verizon is a pretty traditionally stale stock and I was gonna get out of it in December because it had been an anchor and I was sitting at only 7% return for the year. I even posted here about what to do about it. I sat on it a few more weeks as I pondered what to do, and it shot up and I was at almost 16% on the year overall. They had a solid earnings report and went up another $2.00 right before this depression that started last week.

Now it's down $5 in the past week, and I have to move or sell this stock by April. I was planning on riding it a while longer, not expecting the entire market to take a hit like it has. My 401k has dropped by 20k since Friday, and I'm not overly concerned about that because the market is what it is and I'm only 38, but Verizon had such a drastic negative effect on me last year that I wonder if I should just go ahead and get out of it now. Or is it too early to make the call? I'm not afraid to hold, but I want to make the wise decision and because Verizon hasn't been an exciting stock for 15 years or more, I don't know if it's not just the best decision to go ahead and get out. I don't know that it'll recover significantly before the April deadline, ya know?

Any advice is appreciated.

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Pajamas
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Re: Stock Conundrum

Post by Pajamas » Fri Feb 09, 2018 10:30 am

You didn't say what exactly is in your 401(k) or what is available to you in it to buy and I'm not clear on what it means that Fidelity is "getting out of Verizon" so this is just a general observation:

What are you waiting for or expecting to happen with Verizon before April? Verizon has severely underperformed the S&P 500 for quite some time. They are both down significantly during this correction. I wouldn't see any big deal with selling the Verizon and putting the proceeds into an S&P 500 index fund simply because the stock is down recently because the markets are down, too. I would see it as more of a lateral move.

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bottlecap
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Location: Tennessee

Re: Stock Conundrum

Post by bottlecap » Fri Feb 09, 2018 11:17 am

I can't give market timing advice. I gave up on market timing 15 years ago.

Sell it now, sell it in April, or pick some arbitrary date in between and then just do it.

JT

PJR202
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Joined: Sat Nov 11, 2017 11:12 am

Re: Stock Conundrum

Post by PJR202 » Fri Feb 09, 2018 11:59 am

I'm sorry, I worded that incorrectly. I guess they're saying my current company (and not Fidelity) is no longer offering the Verizon Stock Fund as an investment option. This is the notification.

The Verizon Stock Fund (the “Stock Fund”) is scheduled to be removed as an investment option in the Frontier Communications Corporate Services Inc. Savings and Security Plan for Mid-Atlantic Associates (the “Plan”) as of the close of the market (generally 4 p.m. ET) on April 30, 2018. 1
If you do not currently have a balance in the Stock Fund, this notice does not apply to you.
Options for your Stock Fund Balance
If you are currently invested in the Stock Fund, you must decide whether to exchange all or a portion of your balance in the fund to another investment option or withdraw your available stock fund balance prior to April 30, 2018. The portion of your Stock Fund balance that is available for withdrawal is limited to the amounts attributed to employer match.
Your options are as follows:
• Roll over your available stock in-kind to an IRA (meaning that you are able to retain ownership of the stocks in an IRA).
• Liquidate available stock and roll over the proceeds to an IRA.
• Take a taxable distribution of available stock in-kind. Stock certificates or a statement of ownership would be registered to you and a check sent for any fractional shares.
• Liquidate available stock and take a taxable cash distribution with the proceeds.
• Transfer your Stock Fund balance to the plan’s default fund or to another Plan investment option.
The taxable portion of any distribution/withdrawal that is not rolled over to an IRA is subject to mandatory 20% federal income tax withholding (you may owe more or less when you file your income tax, as well as any state or local taxes). There may also be a 10% early withdrawal penalty assessed for any distribution that is not rolled over to an IRA. Please consult with a tax advisor for information about your personal situation.
You should be aware that there is a risk to holding substantial portions of your assets


The last option is what I was thinking of going with, provided I don't have to pay taxes on it (which I'll find out). I could just move it to the stock funds and keep my stuff still in the 80/20 range. I guess liquidating and rolling it to an IRA isn't a bad choice either. I guess I could do the IRA but I doubt I would be contributing anything to it unless I had a windfall. I am by no means and expert in this stuff and I'm perfectly willing to call a Fidelity advisor, but I prefer unbiased opinions before I go to someone who has an agenda of any kind. Any advice is much appreciated, and I will not hold anyone accountable if I took their advice and it didn't pan out. I know full well that I am 100% responsible for my decisions in life.

These are my current choices in the 401k.

Verizon Stock Fund 29.28%

JPM Midcap value 8.58%
WF Large Cap GRTH R6 10.04%
FID Freedom 2045 K .92%
PIM Total RT Institutional 7.06%
AF Europack Growth R6 16.45%
VAnguard Inst Index Plus 9.18%
Vanguard R2000 GR IDX IS 7.37%
Vanguard Treasury ADM 7.28%
VAnguard Wellington ADM 3.73%
Frontier Stock Fund .12% (I don't put anything in here, ever. I don't even know how I got the $253 worth of it I have unless it was a grant during the transition)

PJR202
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Joined: Sat Nov 11, 2017 11:12 am

Re: Stock Conundrum

Post by PJR202 » Fri Feb 09, 2018 12:00 pm

bottlecap wrote:
Fri Feb 09, 2018 11:17 am
I can't give market timing advice. I gave up on market timing 15 years ago.

Sell it now, sell it in April, or pick some arbitrary date in between and then just do it.

JT
And despite your feelings, it's still excellent advice..lol

alex_686
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Re: Stock Conundrum

Post by alex_686 » Fri Feb 09, 2018 12:04 pm

You are going about this backwards. Verizon is going away. Let it go. Water under the bridge, sunk costs, the past is the past. etc.

Figure out your goals, risk tolerance, and market expectations. This is hard.

With the above information, figure out your AA. With the above information, this is easy.

With your AA, figure out which assets goes where. Assets with the highest tax drag, like bonds, go into tax advantage first.

btenny
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Re: Stock Conundrum

Post by btenny » Fri Feb 09, 2018 12:07 pm

I would sell it all right now. You have no tax issues with selling it all. So just get out now and get more diversified. The stock has not been a good performer for a long time. Are you aware of some good new thing they are doing that would make the income or return improve? If so please tell us.

Good Luck.

PJR202
Posts: 12
Joined: Sat Nov 11, 2017 11:12 am

Re: Stock Conundrum

Post by PJR202 » Fri Feb 09, 2018 12:56 pm

btenny wrote:
Fri Feb 09, 2018 12:07 pm
I would sell it all right now. You have no tax issues with selling it all. So just get out now and get more diversified. The stock has not been a good performer for a long time. Are you aware of some good new thing they are doing that would make the income or return improve? If so please tell us.

Good Luck.
I wasn't aware of anything initially, but I was taking my time deciding what to do and it suddenly went up. Then they made a big deal with the NFL. Then net neutrality vote was coming up so I waited a few weeks. It was overturned and Verizon was the biggest proponent of doing that so I figured they had a plan to make some money and still may, but obviously they couldn't just roll something out immediately. I was more looking to see if they made some announcements, etc. The stock was sitting at the high consistently so I kept waiting a few more weeks and I saw they were predicting a good earnings report. It was pretty good and the stock went up a couple more dollars, which got me a few thousand. Plus I get about $700 in dividends per quarter. All was fine and I was just gonna watch a bit longer, then last friday happened and it's dropped from $54 to $49. When the surge started in December it was sitting at $42 at a -15% for the year. So I'm still a good ways up from the crapper, but I'm down 7% in the last week, which sucks.

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Dale_G
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Location: Central Florida - on the grown up side of 81

Re: Stock Conundrum

Post by Dale_G » Fri Feb 09, 2018 1:34 pm

You have some good funds in the 401k. I would move money in the Verizon "fund?" to one or more of the other suitable funds in the 401k if the fund expense ratios in the 401k are lower than say 0.3%.

If your favored Vanguard fund in the 401k has additional expenses tacked on by the plan, I would simply: • Liquidate available stock and roll over the proceeds to an IRA. There is no tax concern, and you then have available a whole bunch of very inexpensive fund options within the IRA.

Dale
Volatility is my friend

jtl46
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Joined: Thu Nov 22, 2012 12:10 pm

Re: Stock Conundrum

Post by jtl46 » Tue Mar 20, 2018 11:47 am

There may not be much capital appreciation but it pays a nice 5% dividend. It is anyone's guess what future returns will be in the stock market but some pretty knowledgeable people are predicting 4% for the next decade.

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