Huge loss on FDX single stock

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gomsoon
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Huge loss on FDX single stock

Post by gomsoon »

Hey forum,

I'm looking for guidance.. I was playing with cash-secured put options contract earlier this year and was forced to buy 100 shares of Fedex (FDX) stock at $240 / share. Today after earnings I have unrealized loss of likely between $9,000 to $10,000. I don't need the money right now so I'm split between:

Option 1: Forget about the unrealized loss for now and keep the stock for the long term
Option 2: Sell, lesson learned, report the loss on tax return, move on with life

Thank you for your help!
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Hector
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Re: Huge loss on FDX single stock

Post by Hector »

Option 2
lakpr
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Re: Huge loss on FDX single stock

Post by lakpr »

You can use the loss at the rate of $3000 per year to offset your income, so depending on your Federal and State tax brackets, that's a 30% relief on the loss. Spread over 3 to 4 years, of course, but it will sting a bit less ...
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Stinky
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Re: Huge loss on FDX single stock

Post by Stinky »

My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
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livesoft
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Re: Huge loss on FDX single stock

Post by livesoft »

Definitely sell. Probably should have done it before the dividend last week.
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gomsoon
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Re: Huge loss on FDX single stock

Post by gomsoon »

Stinky wrote: Tue Dec 17, 2019 5:55 pm My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
Yeah.. definitely not by choice though! I was making little bit of money each month like $100 from cash-secured put options.. then FDX started to tank suddenly so I was forced to buy..
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gomsoon
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Re: Huge loss on FDX single stock

Post by gomsoon »

Stinky wrote: Tue Dec 17, 2019 5:55 pm My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
Yes. Lesson learned. I have most of my money in index funds. FDX is a good company I agree so I hesitant to just sell and take the loss now..
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gomsoon
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Re: Huge loss on FDX single stock

Post by gomsoon »

lakpr wrote: Tue Dec 17, 2019 5:52 pm You can use the loss at the rate of $3000 per year to offset your income, so depending on your Federal and State tax brackets, that's a 30% relief on the loss. Spread over 3 to 4 years, of course, but it will sting a bit less ...
I've actually never done this before.. Can I sell the whole 100 shares, take $9,000 loss now then deduct $3000 each year for next 3 years? Or do I sell just enough shares now to take $3000 realized loss and keep the rest of shares till next year and sell some more?
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Re: Huge loss on FDX single stock

Post by H-Town »

gomsoon wrote: Tue Dec 17, 2019 6:00 pm
lakpr wrote: Tue Dec 17, 2019 5:52 pm You can use the loss at the rate of $3000 per year to offset your income, so depending on your Federal and State tax brackets, that's a 30% relief on the loss. Spread over 3 to 4 years, of course, but it will sting a bit less ...
I've actually never done this before.. Can I sell the whole 100 shares, take $9,000 loss now then deduct $3000 each year for next 3 years? Or do I sell just enough shares now to take $3000 realized loss and keep the rest of shares till next year and sell some more?
First the loss must be offset the capital gain you have in the current year. Any excess of capital loss can be used to reduce taxable income to the extent of $3,000.
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Re: Huge loss on FDX single stock

Post by livesoft »

Sell all. If for some reason you realize any capital gains, then your loss will offset them. Up to $3,000 of excess remaining loss can then be used to offset ordinary (i.e. non-capital gain) income. Then the excess remaining loss gets carried over to next tax year where the process repeats.
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Re: Huge loss on FDX single stock

Post by gomsoon »

livesoft wrote: Tue Dec 17, 2019 6:03 pm Sell all. If for some reason you realize any capital gains, then your loss will offset them. Up to $3,000 of excess remaining loss can then be used to offset ordinary (i.e. non-capital gain) income. Then the excess remaining loss gets carried over to next tax year where the process repeats.
It's really difficult for me to press that "Sell" button when my hard earned ~$9,000 is going to evaporate into thin air. That is crazy lol. Anyone vote for keeping it till retirement?
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Re: Huge loss on FDX single stock

Post by averagedude »

gomsoon wrote: Tue Dec 17, 2019 5:59 pm
Stinky wrote: Tue Dec 17, 2019 5:55 pm My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
Yes. Lesson learned. I have most of my money in index funds. FDX is a good company I agree so I hesitant to just sell and take the loss now..
If this loss motivates you to never buy individual stocks again, this could be the best investment mistake that you have ever made.
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gomsoon
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Re: Huge loss on FDX single stock

Post by gomsoon »

lakpr wrote: Tue Dec 17, 2019 5:52 pm You can use the loss at the rate of $3000 per year to offset your income, so depending on your Federal and State tax brackets, that's a 30% relief on the loss. Spread over 3 to 4 years, of course, but it will sting a bit less ...
So if I'm in 35% tax bracket then would it still be 30% relief on $3000 each year? So $2,100 loss actual loss each year for next 3 years? Thank you
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Re: Huge loss on FDX single stock

Post by livesoft »

gomsoon wrote: Tue Dec 17, 2019 6:07 pmIt's really difficult for me to press that "Sell" button when my hard earned ~$9,000 is going to evaporate into thin air. That is crazy lol. Anyone vote for keeping it till retirement?
Loss aversion is a sinister trap, don't fall for it.

But yes, keep the money you still have for retirement: Use the money from selling to buy something else. Watch out for upcoming distributions if you are into avoiding taxes.
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Re: Huge loss on FDX single stock

Post by 1789 »

Option 2 for sure. Please learn from people's mistakes in this forum and try not to repeat it. You will be much happier person if you stay away from individual stocks, hot sector funds and etc... You can take this experience as a learning.

I always recommend to hold 0% individual stocks (yes, zero means NONE) in portfolio. Many people don't agree with me, which is fine. I would sell it and would not buy any individual stocks including the today's largest market cap company. Your time is more valuable than playing loser's game.
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Re: Huge loss on FDX single stock

Post by MotoTrojan »

gomsoon wrote: Tue Dec 17, 2019 5:57 pm
Stinky wrote: Tue Dec 17, 2019 5:55 pm My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
Yeah.. definitely not by choice though! I was making little bit of money each month like $100 from cash-secured put options.. then FDX started to tank suddenly so I was forced to buy..
You knew, or should’ve known the risk was there, no?

If this is a small chunk of change I’d hold it forever. A good reminder of your poor judgement.
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Re: Huge loss on FDX single stock

Post by lakpr »

gomsoon wrote: Tue Dec 17, 2019 6:10 pm
lakpr wrote: Tue Dec 17, 2019 5:52 pm You can use the loss at the rate of $3000 per year to offset your income, so depending on your Federal and State tax brackets, that's a 30% relief on the loss. Spread over 3 to 4 years, of course, but it will sting a bit less ...
So if I'm in 35% tax bracket then would it still be 30% relief on $3000 each year? So $2,100 loss actual loss each year for next 3 years? Thank you
The max loss you can carry forward deduct against ordinary income is only $3000 per year. With a 35% bracket, that's $1000 less in taxes you pay to the government. $2000 actual loss per year for the next 3 years, yeah about close to $2100 you arrived at

Edited per livesoft's catch on my wording below ..
Last edited by lakpr on Tue Dec 17, 2019 6:34 pm, edited 2 times in total.
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Re: Huge loss on FDX single stock

Post by HomerJ »

gomsoon wrote: Tue Dec 17, 2019 5:57 pm
Stinky wrote: Tue Dec 17, 2019 5:55 pm My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
Yeah.. definitely not by choice though! I was making little bit of money each month like $100 from cash-secured put options.. then FDX started to tank suddenly so I was forced to buy..
This is known as "picking up nickels in front of a steamroller".

Easy money, one nickel at a time.... Unless you slip just once and get flattened. Then you realize maybe all those nickels weren't worth it.
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Re: Huge loss on FDX single stock

Post by Stinky »

gomsoon wrote: Tue Dec 17, 2019 6:07 pm It's really difficult for me to press that "Sell" button when my hard earned ~$9,000 is going to evaporate into thin air. That is crazy lol. Anyone vote for keeping it till retirement?
Your $9,000 has already evaporated into thin air. You just haven’t “realized” the loss yet. But it’s gone.

I’d sell and move on.
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Re: Huge loss on FDX single stock

Post by lakpr »

gomsoon wrote: Tue Dec 17, 2019 6:00 pm
lakpr wrote: Tue Dec 17, 2019 5:52 pm You can use the loss at the rate of $3000 per year to offset your income, so depending on your Federal and State tax brackets, that's a 30% relief on the loss. Spread over 3 to 4 years, of course, but it will sting a bit less ...
I've actually never done this before.. Can I sell the whole 100 shares, take $9,000 loss now then deduct $3000 each year for next 3 years? Or do I sell just enough shares now to take $3000 realized loss and keep the rest of shares till next year and sell some more?
Yes, you have to sell the whole 100 shares, take the $9000 loss, then offset the loss against ordinary income. This assumes that you don't have any other stock gains realized in the same year. IRS rules require you to first offset losses against gains, before they get applied against ordinary income. And as I mentioned before, the max loss you can apply against ordinary income is only $3000 per year.
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Re: Huge loss on FDX single stock

Post by livesoft »

lakpr wrote: Tue Dec 17, 2019 6:21 pm The max loss you can carry forward is only $3000 per year; ...
I don't think that is what you meant to write. I've carried forward hundreds of thousands of dollars of losses.
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Re: Huge loss on FDX single stock

Post by lakpr »

livesoft wrote: Tue Dec 17, 2019 6:27 pm
lakpr wrote: Tue Dec 17, 2019 6:21 pm The max loss you can carry forward is only $3000 per year; ...
I don't think that is what you meant to write. I've carried forward hundreds of thousands of dollars of losses.
Sorry, you are right. I meant the max loss you can deduct against ordinary income in a single year. Will edit the prior post ...
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Re: Huge loss on FDX single stock

Post by gomsoon »

HomerJ wrote: Tue Dec 17, 2019 6:21 pm
gomsoon wrote: Tue Dec 17, 2019 5:57 pm
Stinky wrote: Tue Dec 17, 2019 5:55 pm My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
Yeah.. definitely not by choice though! I was making little bit of money each month like $100 from cash-secured put options.. then FDX started to tank suddenly so I was forced to buy..
This is known as "picking up nickels in front of a steamroller".

Easy money, one nickel at a time.... Unless you slip just once and get flattened. Then you realize maybe all those nickels weren't worth it.
Yes. I've made a few "nickels" for few years selling covered calls and cash-secured puts then got "steamrolled" this time. The "nickels" definitely don't add up to the amount of money I'll be losing.
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Re: Huge loss on FDX single stock

Post by ofckrupke »

gomsoon wrote: Tue Dec 17, 2019 5:37 pm Option 2: Sell, lesson learned, report the loss on tax return, move on with life
The only reason NOT to do #2 immediately is if you have bought shares of FDX in a tax-advantaged account within the last 31 days. [Likewise, don't buy FDX in a tax-advantaged account during a 31 day window starting on the date taxable-account shares are sold at a loss.]
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Re: Huge loss on FDX single stock

Post by RickBoglehead »

What was your long term perspective on the stock? Amazon stopping using them was a huge red flag. Stay away from stocks.
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Re: Huge loss on FDX single stock

Post by gomsoon »

ofckrupke wrote: Tue Dec 17, 2019 6:50 pm
gomsoon wrote: Tue Dec 17, 2019 5:37 pm Option 2: Sell, lesson learned, report the loss on tax return, move on with life
The only reason NOT to do #2 immediately is if you have bought shares of FDX in a tax-advantaged account within the last 31 days. [Likewise, don't buy FDX in a tax-advantaged account during a 31 day window starting on the date taxable-account shares are sold at a loss.]
This was in taxable account. :sharebeer
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Re: Huge loss on FDX single stock

Post by Grt2bOutdoors »

gomsoon wrote: Tue Dec 17, 2019 5:59 pm
Stinky wrote: Tue Dec 17, 2019 5:55 pm My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
Yes. Lesson learned. I have most of my money in index funds. FDX is a good company I agree so I hesitant to just sell and take the loss now..
Sell it! If there ever is a next time that you do something like this and you have conviction in the stock, pony up the money and buy it at least 31 days before the end of the year. After 31 days has elapsed, sell your high cost basis shares, take the loss for the year and ride your conviction buy out. That is one way to potentially make lemonade from lemons.
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Re: Huge loss on FDX single stock

Post by DesertDiva »

averagedude wrote: Tue Dec 17, 2019 6:08 pm
gomsoon wrote: Tue Dec 17, 2019 5:59 pm
Stinky wrote: Tue Dec 17, 2019 5:55 pm My goodness! You lost $9k-$10k on a $24k investment in a single stock in less than a year? Fed Ex is a good company, but even good companies can hit rough patches with their stock price.

I’d sell and take the loss. And try to not buy single stocks again.
Yes. Lesson learned. I have most of my money in index funds. FDX is a good company I agree so I hesitant to just sell and take the loss now..
If this loss motivates you to never buy individual stocks again, this could be the best investment mistake that you have ever made.
Yes, as long as OP vows to commit to the Bogleheads Investment Philosophy from this point forward:
https://www.bogleheads.org/wiki/Boglehe ... philosophy
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Re: Huge loss on FDX single stock

Post by gomsoon »

Does anyone share any similar experiences? Did selling at terrible loss pay off in the end?
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Re: Huge loss on FDX single stock

Post by JMacDonald »

An article about FedEx in today's WSJ:

FedEx Warns of Another Hit to Profits
https://www.wsj.com/articles/fedex-warn ... quote_news

Your losses might be even be more if you don't sell soon.
Best Wishes, | Joe
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Re: Huge loss on FDX single stock

Post by ofckrupke »

gomsoon wrote: Tue Dec 17, 2019 6:54 pm
ofckrupke wrote: Tue Dec 17, 2019 6:50 pm
gomsoon wrote: Tue Dec 17, 2019 5:37 pm Option 2: Sell, lesson learned, report the loss on tax return, move on with life
The only reason NOT to do #2 immediately is if you have bought shares of FDX in a tax-advantaged account within the last 31 days. [Likewise, don't buy FDX in a tax-advantaged account during a 31 day window starting on the date taxable-account shares are sold at a loss.]
This was in taxable account.
That was clear. What was not clear was whether the specified, seemingly unrelated events had occurred in tax-advantaged account within the same taxpayer-unit in the recent past (or might, ditto, in the near future, absent a heads-up).
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Re: Huge loss on FDX single stock

Post by RickBoglehead »

gomsoon wrote: Tue Dec 17, 2019 7:01 pm Does anyone share any similar experiences? Did selling at terrible loss pay off in the end?
Your loss is not "terrible".

Many have lost magnitudes more. Dot com bust, six figures, in retirement accounts, so no tax losses.

You won't find anyone telling you that trying to catch sharp knives, blind folded, is smart. Are you an expert in that industry? That company? No? Sell and learn a not very painful lesson.
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Re: Huge loss on FDX single stock

Post by Wiggums »

FedEx Corp. cut its earnings targets for the fourth time in 2019.

The current share price (after hours was 152). It’s not going to reach $240 anytime soon. I had a packing coming via fedex ground. It got to my area in a timely manner, and then sat on a truck for 7 days. My experience with FedEx ground was so bad thst I wrote a real letter to the CEO. I can understand why Amazon prohibits the use of Fedex ground during the holidays.

I had a media and telecom fund that lost most than half of my $40k investment. It went down to $8,000 at one point. Up fast usually means down faster.

It happens. I’d learn from this and move on.
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Re: Huge loss on FDX single stock

Post by averagedude »

gomsoon wrote: Tue Dec 17, 2019 7:01 pm Does anyone share any similar experiences? Did selling at terrible loss pay off in the end?
From ages 20 to 23, I bought company stock at around $150 a week, which was a significant amount of my pay. The company stock split 4 times in 9 years. Alot of my coworkers were buying and making tons of money, but of course they were selling every year or so to buy toys. I was committed to make this a long term investment. This stock went from being a fast growing company to a stalwart. I stopped buying, but held on for 25 more years and finally sold it. Although it was a profitable investment that had a capital gain, it grossly under performed the market. When I stopped buying this stock at age 23, I swore not to buy individual stocks again. I made the mistake of holding on too long and if I had just bought the market instead, I estimate that my net worth would be $100,000 more than what I have today. I'm so glad that I made this mistake when I was young. That lemon stock convinced me to buy index funds instead of individual stocks, and today I have lemonade.
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Re: Huge loss on FDX single stock

Post by H-Town »

gomsoon wrote: Tue Dec 17, 2019 7:01 pm Does anyone share any similar experiences? Did selling at terrible loss pay off in the end?
I did many years ago. Way before I knew about indexing. It was close to be worthless stocks. If I were to hold on those stocks, it wouldn’t make much of the difference. I sold it and took the lesson. Many years down the road, I haven’t touched a single stock, options, and leverage investing. Not that I can’t or don’t enjoy doing them. It’s that my time and effort are very well compensated elsewhere.

It sounds like you have high income. So it won’t impact you financially. Take it as a lesson of investing and move on.
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Re: Huge loss on FDX single stock

Post by Trader Joe »

gomsoon wrote: Tue Dec 17, 2019 5:37 pm Hey forum,

I'm looking for guidance.. I was playing with cash-secured put options contract earlier this year and was forced to buy 100 shares of Fedex (FDX) stock at $240 / share. Today after earnings I have unrealized loss of likely between $9,000 to $10,000. I don't need the money right now so I'm split between:

Option 1: Forget about the unrealized loss for now and keep the stock for the long term
Option 2: Sell, lesson learned, report the loss on tax return, move on with life

Thank you for your help!
Option 2. Learn your lesson. Also, no one is forced to do anything.
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Re: Huge loss on FDX single stock

Post by MAJIC9 »

gomsoon wrote: Tue Dec 17, 2019 7:01 pm Does anyone share any similar experiences? Did selling at terrible loss pay off in the end?
Yes and Yes :)
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Re: Huge loss on FDX single stock

Post by gomsoon »

Thank you everyone for replying! :beer
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Re: Huge loss on FDX single stock

Post by AlphaLess »

gomsoon wrote: Tue Dec 17, 2019 6:07 pm
livesoft wrote: Tue Dec 17, 2019 6:03 pm Sell all. If for some reason you realize any capital gains, then your loss will offset them. Up to $3,000 of excess remaining loss can then be used to offset ordinary (i.e. non-capital gain) income. Then the excess remaining loss gets carried over to next tax year where the process repeats.
It's really difficult for me to press that "Sell" button when my hard earned ~$9,000 is going to evaporate into thin air. That is crazy lol. Anyone vote for keeping it till retirement?
Right there! You have shown that you have ZERO skill in trading.
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Re: Huge loss on FDX single stock

Post by AlphaLess »

gomsoon wrote: Tue Dec 17, 2019 10:21 pm Thank you everyone for replying! :beer
Unless you sold before the bell today, Tue Dec 17th, tomorrow at open you will find an additional $1.1K loss.
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Re: Huge loss on FDX single stock

Post by bugleheadd »

ofckrupke wrote: Tue Dec 17, 2019 6:50 pm
gomsoon wrote: Tue Dec 17, 2019 5:37 pm Option 2: Sell, lesson learned, report the loss on tax return, move on with life
The only reason NOT to do #2 immediately is if you have bought shares of FDX in a tax-advantaged account within the last 31 days. [Likewise, don't buy FDX in a tax-advantaged account during a 31 day window starting on the date taxable-account shares are sold at a loss.]
Why is this the case?
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Re: Huge loss on FDX single stock

Post by ofckrupke »

bugleheadd wrote: Tue Dec 17, 2019 11:39 pm
ofckrupke wrote: Tue Dec 17, 2019 6:50 pm
gomsoon wrote: Tue Dec 17, 2019 5:37 pm Option 2: Sell, lesson learned, report the loss on tax return, move on with life
The only reason NOT to do #2 immediately is if you have bought shares of FDX in a tax-advantaged account within the last 31 days. [Likewise, don't buy FDX in a tax-advantaged account during a 31 day window starting on the date taxable-account shares are sold at a loss.]
Why is this the case?
Either of these would trigger a wash sale and some or all of the loss in the taxable account would be excluded from being netted against other capital gains during the year or against other income. Worse: because the "replacement shares" would be in a tax-advantaged account, one would not benefit at their disposition by the adjustment of their cost basis as prescribed by the wash sale rule. So whereas a wash sale event commonly results in merely a delay in government's mitigation of the loss (transferred from some or all of the sold shares to the replacement shares), in such a case the delay would effectively be...forever.
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Re: Huge loss on FDX single stock

Post by Momus »

I lost 20k on MED. I sold at $16/share, bought at $30/share.

7 years later, the same stock MED touched $250/share... lol
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HomerJ
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Re: Huge loss on FDX single stock

Post by HomerJ »

Momus wrote: Wed Dec 18, 2019 12:18 am I lost 20k on MED. I sold at $16/share, bought at $30/share.

7 years later, the same stock MED touched $250/share... lol
I bought GE around 35 or so in 2005.

It dropped to 8 in 2008...

Sold it around 18 in 2010.

Took 8 years to get back to 30 or so... And then crashed again and is at 11 today.

If I had stuck around waiting for it to get back to even, I'd still be waiting, still down a ton, and would have missed out on a 300% general stock market return with that money.

For every story where sticking it out would make you rich, there's another 5 stories where sticking it out keeps you poor. The odds make it far more likely to pick losers than winners.

It's not investing, it's gambling. And gambling with the odds against you. Buy the stock market index, and you'll get the market returns... No more, but no less.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
WoundedWing
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Re: Huge loss on FDX single stock

Post by WoundedWing »

here today gone tomorrow
Last edited by WoundedWing on Fri Dec 20, 2019 9:48 am, edited 1 time in total.
Bulls make money, Bears make money & Pigs get Slaughtered. -- Jim Cramer
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RickBoglehead
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Location: In a house

Re: Huge loss on FDX single stock

Post by RickBoglehead »

WoundedWing wrote: Wed Dec 18, 2019 4:21 am Option 2.

If I were you I'd sell and never play options again. Only play with individual stocks you can afford to buy & hold. Focus on doing your due diligence.

For complicated reasons beyond my control I took a 30k loss in GE a few years ago when my money was supposed to be managed by a money manager. Turns out he just took his $220+ monthly fee and never made me a dime nor did he guard me from excessive loss. He is a famous man in my state from a famous family.

Years later now my account is at its highest ever (even with the bath I've taken in 3M this year) and I don't have the luxury of watching all this for retirement. Meaning I swing trade stocks to survive. I am physically handicapped and I take out money for groceries every week. This is my work. I get no government help beyond my medical plan. You need a certain kind of discipline to do this. In a nut shell here are mine:

I shoot for 8-12% gain per trade.
I lock down most losses at 10%. ( this is where the order type can help because there are ones to help you automatically do this )
I only buy single stocks. ( I am only here trying to figure out what a Boglehead is. )
At the end of most years I'm up about 30%.

I am not most people, though. I was always in the top 3 of my class in math. I was living on my own at age 16. I have followed Jim Cramer and since you sound like you are still in an early learning phase I would recommend you pony up the paltry $400 for his Action Alerts Plus club and learn to do it right. He will teach you, if you're open minded enough to truly discipline your trades. ( I kept writing down his rules in a notebook until I have them memorized. )

BTW the reasoning why to take Option 2 was only shared by one other member here: You need to sell those funds in order to get them working for you once again. Preservation of capital is your highest priority because w/o it you are not in the game. You need to realize you are in a forest even if you are just clinging to one dieing tree in your thoughts right now. I wish you luck because as Cramer says "It's better to be lucky than good!"

(now I hope nobody nukes this message thinking I am here to advertise for Cramer. I am not. He just happens to be what is best for me and my money. )
Read the Wiki and you have your answer...

Your investment process may work for you, but implying that math skills enable someone to make 30% is ridiculous. Are you including all costs in that 30%, and calculating your after tax return? Don't post it, this forum really doesn't have interest in it, just asking.

Jim Cramer is a blowhard IMO. He founded TheStreet.com. It went public, and his share was worth $200 million. The company sold in June for a value of $34 million. Great success!
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.
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prudent
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Re: Huge loss on FDX single stock

Post by prudent »

WoundedWing wrote: Wed Dec 18, 2019 4:21 am I only buy single stocks. ( I am only here trying to figure out what a Boglehead is. )
WoundedWing, welcome!

The Boglehead investing philosophy is essentially:
Develop a workable plan
Invest early and often
Never bear too much or too little risk
Diversify
Never try to time the market
Use index funds when possible
Keep costs low
Minimize taxes
Invest with simplicity
Stay the course

There's much more detail and elaboration in our great wiki .
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1789
Posts: 1599
Joined: Fri Aug 16, 2019 3:31 pm

Re: Huge loss on FDX single stock

Post by 1789 »

WoundedWing wrote: Wed Dec 18, 2019 4:21 am Option 2.

If I were you I'd sell and never play options again. Only play with individual stocks you can afford to buy & hold. Focus on doing your due diligence.

For complicated reasons beyond my control I took a 30k loss in GE a few years ago when my money was supposed to be managed by a money manager. Turns out he just took his $220+ monthly fee and never made me a dime nor did he guard me from excessive loss. He is a famous man in my state from a famous family.

Years later now my account is at its highest ever (even with the bath I've taken in 3M this year) and I don't have the luxury of watching all this for retirement. Meaning I swing trade stocks to survive. I am physically handicapped and I take out money for groceries every week. This is my work. I get no government help beyond my medical plan. You need a certain kind of discipline to do this. In a nut shell here are mine:

I shoot for 8-12% gain per trade.
I lock down most losses at 10%. ( this is where the order type can help because there are ones to help you automatically do this )
I only buy single stocks. ( I am only here trying to figure out what a Boglehead is. )
At the end of most years I'm up about 30%.

I am not most people, though. I was always in the top 3 of my class in math. I was living on my own at age 16. I have followed Jim Cramer and since you sound like you are still in an early learning phase I would recommend you pony up the paltry $400 for his Action Alerts Plus club and learn to do it right. He will teach you, if you're open minded enough to truly discipline your trades. ( I kept writing down his rules in a notebook until I have them memorized. )

BTW the reasoning why to take Option 2 was only shared by one other member here: You need to sell those funds in order to get them working for you once again. Preservation of capital is your highest priority because w/o it you are not in the game. You need to realize you are in a forest even if you are just clinging to one dieing tree in your thoughts right now. I wish you luck because as Cramer says "It's better to be lucky than good!"

(now I hope nobody nukes this message thinking I am here to advertise for Cramer. I am not. He just happens to be what is best for me and my money. )
1) Good stock picking skill is a myth. Please take a look at the anecdote mentioned in Taylor Larimore’s book “The Bogleheads Guide to Three Fund Portfolio”, Benefit 5: no individual stock risk... In this chapter you will see how successful funny Cramer is. His stock picks for Dotcom bubble era verified to be decreased 90%.
2) Math has nothing to do with investing skills. Because finance is not a science like that. Remember Newton invented “Calculus” but he failed in investing.
3) It is proven that best investors are dead people, followed by people who forgot that they have accounts. I can’t remember where Fido research results, but I remember reading about it.

Good luck!
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
WoundedWing
Posts: 23
Joined: Wed Dec 18, 2019 3:02 am

Re: Huge loss on FDX single stock

Post by WoundedWing »

These are not the droids you are looking for.
Last edited by WoundedWing on Fri Dec 20, 2019 9:51 am, edited 1 time in total.
Bulls make money, Bears make money & Pigs get Slaughtered. -- Jim Cramer
jeroly
Posts: 101
Joined: Wed Jan 24, 2018 2:07 pm

Re: Huge loss on FDX single stock

Post by jeroly »

Think of it this way...

You have already taken the loss through the writing of the put. You are now essentially betting on a different horse than the one that lost you your money.

You now find yourself with an investment in the underlying stock that you did not originally intend to make. To buy the stock you either had cash in your brokerage account, or other investments were liquidated to come up with the $$$. In either case your asset allocation has changed from what it had been and you should probably adjust your holdings to get back to your previous allocation.

Making investment decisions solely on the basis of getting favorable tax treatment is very often a bad idea. However, keeping an asset allocation that’s different from what you want just to avoid recognizing the loss is even worse. So let’s assume you’ll only consider holding on to the stock if if makes sense within your overall portfolio.

Now you need to consider whether you want to own the stock at all. If you are convinced that the stock is undervalued and are able to risk the money you have invested in the shares, without affecting your overall investment plan, then do so. However, also consider whether the size of the investment is also right - perhaps you want to hold on to some but not all of the shares.
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