Paralyzed by TSLA

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FoolMeOnce
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Paralyzed by TSLA

Post by FoolMeOnce » Tue Feb 04, 2020 4:45 pm

We have a lot of individual stocks and active funds as a holdover from a former advisor. In the last two weeks, our Tesla position has gone from about 5% to 10% of our invested assets. This seems uncomfortably overweight, though at the same time we were feeling rather financially secure before this month's run-up and would not be damaged by wiping out these last two weeks. It would sting, psychologically, though.

The problem is that this position is very nearly all long-term gains, so nearly every dollar sold would be taxed. Selling would trigger a big tax hit. If we sell to get back to 5% of our invested assets, I think at least 3/4 will get hit with the extra 3.8% NIIT and be taxed at 18.8%. If we sell more, the rest of course will get hit with that NIIT as well. Also, selling this much would probably trigger the AMT for us - reducing TSLA to 5% of our investments would itself generate LTCG greater than our combined gross annual employment income.

We planned to bunch a few years of donations to a DAF this year to offset some LTCG. The plan was to both donate and sell funds with high ERs (0.7 and above). I suppose I should shift to reducing TSLA, but really wanted to shed more high-cost funds. And we could move more total investment value out of those high-cost funds, because they are not all gains like with TSLA (that is, for X LTCG, we could get out of 2X of the funds, but only ~1.02X of TSLA). So here I am, with a good problem to have, but I am paralyzed. Do I reduce TSLA and take a big tax hit? What would you do?

jebmke
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Re: Paralyzed by TSLA

Post by jebmke » Tue Feb 04, 2020 4:48 pm

I always dump individual stocks when it is time to donate to a DAF. Other than some legacy holdings from the 1980s, I don't hold individual stocks so every chance I get to dump them without paying the tax I take it if it makes sense.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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papito23
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Re: Paralyzed by TSLA

Post by papito23 » Tue Feb 04, 2020 4:57 pm

Sounds like you have a wonderful problem to have, a bunch of valuable assets.

Fortunately, they exist in ~$887 chunks, and not $300,000 entities like houses.

Since it's not a binary choice, you can pick any position on the scale from "sell nothing" to "sell everything."

Regret minimization... do a little bit of something. When TSLA hit $420 and the CEO tweeted, "whoa, stock so high" I sold 3 of my 11 shares, made a profit, and now I have to pay the taxes. Do I regret selling them since the stock has since doubled within 6 weeks? Sort of. But not really... I kept 8 of them. I knew that whatever happened, I could feel okay about my decision.
A thing is right when it tends to preserve the integrity, stability, and beauty of the biotic community. It is wrong when it tends otherwise. -Aldo Leopold's Golden Rule of Ecology

bloom2708
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Re: Paralyzed by TSLA

Post by bloom2708 » Tue Feb 04, 2020 4:59 pm

Tax is a part of it.

When you bought the individual stocks did you hope for losses or for big gains (aka tax is owed).

Do not let the tax tail wag the dog. Paying tax means you had skill or luck. :wink:
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead

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greg24
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Re: Paralyzed by TSLA

Post by greg24 » Tue Feb 04, 2020 5:03 pm

If/when the stock tumbles 20%, you're gonna be kicking yourself for not selling.

annu
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Re: Paralyzed by TSLA

Post by annu » Tue Feb 04, 2020 5:07 pm

I have sold shares in past and will do so in future, when they hit my target price. I might pay the tax man, but it can also go a lot lower and I also the money that I could be paying taxes on...

I sold bunch earlier this year, and will continue with my individual holdings, as do ot like the risk and also extra work.
I will be hit with taxes, but the way I look at it, I will still end up with more money, that I can invest/ use where they are better fit.

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willthrill81
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Re: Paralyzed by TSLA

Post by willthrill81 » Tue Feb 04, 2020 5:33 pm

greg24 wrote:
Tue Feb 04, 2020 5:03 pm
If/when the stock tumbles 20%, you're gonna be kicking yourself for not selling.
It might double again before that happens. You just don't know.

I agree with jebmke that this sounds like a great opportunity to start a donor advised fund.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

MotoTrojan
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Re: Paralyzed by TSLA

Post by MotoTrojan » Tue Feb 04, 2020 5:34 pm

Sell it. I bet the after-tax value FAR exceeds what the pre-tax value would be if you had invested in the S&P500 instead (or hell, even QQQ). Is that not enough justification to not care about the tax?

Jimsad
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Re: Paralyzed by TSLA

Post by Jimsad » Tue Feb 04, 2020 5:52 pm

I bought 4 shares of Tesla today to satisfy my wife who has been pestering me to buy the stock for last 7 days . She feels it will go to $6000/ share soon .
I did it more to show her how we would lose money by buying into ‘hot ‘ stocks .
Will see what happens

SeaToTheBay
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Re: Paralyzed by TSLA

Post by SeaToTheBay » Tue Feb 04, 2020 5:53 pm

Tax means you're making money. You have a ton of profit and a good reason to sell.

averagedude
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Re: Paralyzed by TSLA

Post by averagedude » Tue Feb 04, 2020 6:12 pm

More than likely, it is very difficult to win except in hindsight. If you sell any portion of this stock and it turns out to be a big winner, you will feel like a fool. If you let it ride and the stock plummets, you will feel like a fool. I prefer index funds where I don't experience lost sleep due to fear, greed, or wondering how smart or stupid I am.

KlangFool
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Re: Paralyzed by TSLA

Post by KlangFool » Tue Feb 04, 2020 6:19 pm

OP,

My family member was holding a stock with 10 million worth of gain during Telecom bust. He knew that he should sell some of his holdings. But, he could not since the stock was gaining a few hundred thousand per week. In the end, he lost it all.

If you could not sell when you need to, you have no business gambling on the individual stock. I learned this lesson too late during Telecom bust. I lost 50% of my whole life savings during Telecom bust.

KlangFool

Topic Author
FoolMeOnce
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Re: Paralyzed by TSLA

Post by FoolMeOnce » Tue Feb 04, 2020 6:26 pm

Thanks for the kick in the pants, folks. I think I came here to get that. I'll sell a good chunk tomorrow morning.

averagedude
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Re: Paralyzed by TSLA

Post by averagedude » Tue Feb 04, 2020 6:27 pm

KlangFool wrote:
Tue Feb 04, 2020 6:19 pm
OP,

My family member was holding a stock with 10 million worth of gain during Telecom bust. He knew that he should sell some of his holdings. But, he could not since the stock was gaining a few hundred thousand per week. In the end, he lost it all.

If you could not sell when you need to, you have no business gambling on the individual stock. I learned this lesson too late during Telecom bust. I lost 50% of my whole life savings during Telecom bust.

KlangFool
My biggest investment mistake was buying individual stocks (employer). I am so glad that this happened in my low 20's. Otherwise I would think that I was super smart and it would cost me dearly when I actually had a huge nest egg.

Mr.BB
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Re: Paralyzed by TSLA

Post by Mr.BB » Tue Feb 04, 2020 6:32 pm

All profit is good! Paying tax means you did good.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

averagedude
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Re: Paralyzed by TSLA

Post by averagedude » Tue Feb 04, 2020 6:33 pm

FoolMeOnce wrote:
Tue Feb 04, 2020 6:26 pm
Thanks for the kick in the pants, folks. I think I came here to get that. I'll sell a good chunk tomorrow morning.
OP,
This is a wise decision. Please don't think that this profitable endeavor was from your intellect, it was actually from luck. If you acknowledge this, it will more than likely benefit you in the future.

beehivehave
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Re: Paralyzed by TSLA

Post by beehivehave » Tue Feb 04, 2020 6:34 pm

What could be worse than regretting paying taxes on profits you made while doing absolutely nothing?

Topic Author
FoolMeOnce
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Re: Paralyzed by TSLA

Post by FoolMeOnce » Tue Feb 04, 2020 6:37 pm

averagedude wrote:
Tue Feb 04, 2020 6:33 pm
FoolMeOnce wrote:
Tue Feb 04, 2020 6:26 pm
Thanks for the kick in the pants, folks. I think I came here to get that. I'll sell a good chunk tomorrow morning.
OP,
This is a wise decision. Please don't think that this profitable endeavor was from your intellect, it was actually from luck. If you acknowledge this, it will more than likely benefit you in the future.
Of course it was luck! Holdover from my pre-Boglehead days, and I'm still trying to unwind the portfolio. I was focused more on high-cost funds until this nearly doubled in two weeks.

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bluquark
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Re: Paralyzed by TSLA

Post by bluquark » Tue Feb 04, 2020 9:18 pm

Your original idea of donating the TSLA to a DAF is still better than selling, I think. You should always donate the most appreciated thing to a DAF.

At the same time, I would just sell the 0.7% ER funds if you have too much of those to donate anytime soon having fully funded your DAF with the TSLA. If you assume 5% expected growth rate per year, then the time-value per year of a LTCG taxed amount cannot be higher than 0.75% (= 5% * 15%), so it's definitely a winner to sell the high-ER funds immediately.
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jcavana1
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Re: Paralyzed by TSLA

Post by jcavana1 » Wed Feb 05, 2020 6:15 am

Sell it all.

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1789
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Re: Paralyzed by TSLA

Post by 1789 » Wed Feb 05, 2020 6:19 am

This game is not gonna end well. Sell it today, sleep like a baby
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aristotelian
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Re: Paralyzed by TSLA

Post by aristotelian » Wed Feb 05, 2020 6:57 am

greg24 wrote:
Tue Feb 04, 2020 5:03 pm
If/when the stock tumbles 20%, you're gonna be kicking yourself for not selling.
Actually it lost 10% at the end of the day yesterday and us down 4% premarket. He has already cost himself a bundle by sitting.

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FoolMeOnce
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Re: Paralyzed by TSLA

Post by FoolMeOnce » Wed Feb 05, 2020 7:35 am

I sold last night after-market.

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Re: Paralyzed by TSLA

Post by z3r0c00l » Wed Feb 05, 2020 7:45 am

FoolMeOnce wrote:
Tue Feb 04, 2020 4:45 pm

The problem is that this position is very nearly all long-term gains, so nearly every dollar sold would be taxed.
When you make money, you generally have to pay taxes on it eventually. I would gladly make TSLA returns and then pay taxes on them, in fact I would love to pay taxes on a few million if possible. TSLA is similar to a winning lotto ticket albeit one that probably won't expire after a year, but it could drop in value. Would you sit on a winning lotto ticket for fear of the taxes?

I would sell every penny, you will be forced to own the shares again soon in your mutual fund anyway : )

sd323232
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Re: Paralyzed by TSLA

Post by sd323232 » Wed Feb 05, 2020 10:38 am

Looks like the problem will go away on it's own soon, there will be no capital gains.

Lesson to us all, it's ok to sell and pay capital gains.

rockstar
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Re: Paralyzed by TSLA

Post by rockstar » Wed Feb 05, 2020 10:41 am

sd323232 wrote:
Wed Feb 05, 2020 10:38 am
Looks like the problem will go away on it's own soon, there will be no capital gains.

Lesson to us all, it's ok to sell and pay capital gains.
Don’t fear the tax man. Profits are good. Losses are bad. :)

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Wiggums
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Re: Paralyzed by TSLA

Post by Wiggums » Wed Feb 05, 2020 10:52 am

bloom2708 wrote:
Tue Feb 04, 2020 4:59 pm
Tax is a part of it.

When you bought the individual stocks did you hope for losses or for big gains (aka tax is owed).

Do not let the tax tail wag the dog. Paying tax means you had skill or luck. :wink:
I agree. Also, I donate a bunch to my DAF. When I win, so do my charities. Win-Win.

You’ll never pick the top. You’ll never pick the bottom.
Last edited by Wiggums on Wed Feb 05, 2020 10:54 am, edited 3 times in total.

3funder
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Re: Paralyzed by TSLA

Post by 3funder » Wed Feb 05, 2020 10:52 am

z3r0c00l wrote:
Wed Feb 05, 2020 7:45 am
FoolMeOnce wrote:
Tue Feb 04, 2020 4:45 pm

The problem is that this position is very nearly all long-term gains, so nearly every dollar sold would be taxed.
When you make money, you generally have to pay taxes on it eventually. I would gladly make TSLA returns and then pay taxes on them, in fact I would love to pay taxes on a few million if possible. TSLA is similar to a winning lotto ticket albeit one that probably won't expire after a year, but it could drop in value. Would you sit on a winning lotto ticket for fear of the taxes?

I would sell every penny, you will be forced to own the shares again soon in your mutual fund anyway : )
+1. Sell it.

MichCPA
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Re: Paralyzed by TSLA

Post by MichCPA » Wed Feb 05, 2020 10:59 am

10% of your portfolio is too much for an individual stock.

As far as taxes go, I normally look at my assets each year and calculate a deferred tax liability based on my unrealized gains and traditional portion of my 401k. If you calculate these numbers all along, it doesn't feel as much like you are taking an avoidable expense. The realizable value of your stocks being less than what you see on the balance screen is just reality for taxable accounts.

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backofbeyond
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Re: Paralyzed by TSLA

Post by backofbeyond » Wed Feb 05, 2020 11:15 am

Sell....at least sell some.

I had 120 shares of a company that went from $800 to $30,000 a share over about 2 years. I got my brother into the same company and he also bought 120 shares just a bit later than I did, so his entry was about $1020 a share. He told me when it hit $25K to sell or at least sell some. I didn't listen, I was GREEDY and also afraid of the tax bite. It subsequently dropped to $2,000 a share, stayed there for years. I finally sold at $3,500 two years ago. Of course it has since went up to $12K. :oops:

While my brother sold 65% at $25,000, 25% at $30,000 (he hit the very top) and 10% which he just sold for $12,000.

He made millions out of the deal, I made around $400K before taxes.

I take 100% of the blame. And to be honest, I still did well, so can't complain...but still do. :P
The question isn't at what age I want to retire, it is at what income. - George Foreman

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CalculatedRisk
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Re: Paralyzed by TSLA

Post by CalculatedRisk » Wed Feb 05, 2020 12:21 pm

backofbeyond wrote:
Wed Feb 05, 2020 11:15 am
Sell....at least sell some.

I had 120 shares of a company that went from $800 to $30,000 a share over about 2 years. I got my brother into the same company and he also bought 120 shares just a bit later than I did, so his entry was about $1020 a share. He told me when it hit $25K to sell or at least sell some. I didn't listen, I was GREEDY and also afraid of the tax bite. It subsequently dropped to $2,000 a share, stayed there for years. I finally sold at $3,500 two years ago. Of course it has since went up to $12K. :oops:

While my brother sold 65% at $25,000, 25% at $30,000 (he hit the very top) and 10% which he just sold for $12,000.

He made millions out of the deal, I made around $400K before taxes.

I take 100% of the blame. And to be honest, I still did well, so can't complain...but still do. :P
Your entire story is about market timing. You're essentially telling people to sell at the top and not wait for the price to fall, but how do they know what the top is? You bought at $800 and it went to $30,000. Why didn't you sell at $1,000? $5,000? $15,000?

I think the story you should be telling is: "I bought at $800, but I shouldn't have because it could have gone to $0. I should have bought an index fund instead. However, I got lucky!"

**Full disclosure, I own Tesla stock, which I'm not able to sell for complicated reasons.

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backofbeyond
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Re: Paralyzed by TSLA

Post by backofbeyond » Wed Feb 05, 2020 1:45 pm

CalculatedRisk wrote:
Wed Feb 05, 2020 12:21 pm
backofbeyond wrote:
Wed Feb 05, 2020 11:15 am
Sell....at least sell some.

I had 120 shares of a company that went from $800 to $30,000 a share over about 2 years. I got my brother into the same company and he also bought 120 shares just a bit later than I did, so his entry was about $1020 a share. He told me when it hit $25K to sell or at least sell some. I didn't listen, I was GREEDY and also afraid of the tax bite. It subsequently dropped to $2,000 a share, stayed there for years. I finally sold at $3,500 two years ago. Of course it has since went up to $12K. :oops:

While my brother sold 65% at $25,000, 25% at $30,000 (he hit the very top) and 10% which he just sold for $12,000.

He made millions out of the deal, I made around $400K before taxes.

I take 100% of the blame. And to be honest, I still did well, so can't complain...but still do. :P
Your entire story is about market timing. You're essentially telling people to sell at the top and not wait for the price to fall, but how do they know what the top is? You bought at $800 and it went to $30,000. Why didn't you sell at $1,000? $5,000? $15,000?

I think the story you should be telling is: "I bought at $800, but I shouldn't have because it could have gone to $0. I should have bought an index fund instead. However, I got lucky!"

**Full disclosure, I own Tesla stock, which I'm not able to sell for complicated reasons.
Actually, you have no idea just how correct you are. When all was said and done, had I put my original investment in the S&P500, I would have almost exactly came out with the same amount for the length of time that I held the investment. So yes, totally agree with you.
The question isn't at what age I want to retire, it is at what income. - George Foreman

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watchnerd
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Re: Paralyzed by TSLA

Post by watchnerd » Wed Feb 05, 2020 1:53 pm

greg24 wrote:
Tue Feb 04, 2020 5:03 pm
If/when the stock tumbles 20%, you're gonna be kicking yourself for not selling.
Down -18.7% so far today.

Are we there yet?
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CalculatedRisk
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Re: Paralyzed by TSLA

Post by CalculatedRisk » Wed Feb 05, 2020 1:58 pm

watchnerd wrote:
Wed Feb 05, 2020 1:53 pm
greg24 wrote:
Tue Feb 04, 2020 5:03 pm
If/when the stock tumbles 20%, you're gonna be kicking yourself for not selling.
Down -18.7% so far today.

Are we there yet?
OP said he already sold:
FoolMeOnce wrote:
Wed Feb 05, 2020 7:35 am
I sold last night after-market.

deltaneutral83
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Re: Paralyzed by TSLA

Post by deltaneutral83 » Wed Feb 05, 2020 2:09 pm

Imagine you left for a trip where internet access was spotty or non existent over this past weekend and were just now getting around to reading the "blood in the street" headlines today and then realizing you were up from Friday's close probably over 10%.

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Psyayeayeduck
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Re: Paralyzed by TSLA

Post by Psyayeayeduck » Wed Feb 05, 2020 2:25 pm

Congrats on your bet. If it were me, I would take the extra 5%, invested in some index funds, pay the tax on it, and call it a day leaving the remaining 5% as playing with house money.

Mr.BB
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Re: Paralyzed by TSLA

Post by Mr.BB » Wed Feb 05, 2020 3:10 pm

CalculatedRisk wrote:
Wed Feb 05, 2020 1:58 pm
watchnerd wrote:
Wed Feb 05, 2020 1:53 pm
greg24 wrote:
Tue Feb 04, 2020 5:03 pm
If/when the stock tumbles 20%, you're gonna be kicking yourself for not selling.
Down -18.7% so far today.

Are we there yet?
OP said he already sold:
FoolMeOnce wrote:
Wed Feb 05, 2020 7:35 am
I sold last night after-market.
:sharebeer
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

Topic Author
FoolMeOnce
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Re: Paralyzed by TSLA

Post by FoolMeOnce » Wed Feb 05, 2020 3:20 pm

CalculatedRisk wrote:
Wed Feb 05, 2020 1:58 pm
watchnerd wrote:
Wed Feb 05, 2020 1:53 pm
greg24 wrote:
Tue Feb 04, 2020 5:03 pm
If/when the stock tumbles 20%, you're gonna be kicking yourself for not selling.
Down -18.7% so far today.

Are we there yet?
OP said he already sold:
FoolMeOnce wrote:
Wed Feb 05, 2020 7:35 am
I sold last night after-market.
Yep, that was also lucky.

Shallowpockets
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Re: Paralyzed by TSLA

Post by Shallowpockets » Wed Feb 05, 2020 4:51 pm

backofbeyond wrote:
Wed Feb 05, 2020 11:15 am
Sell....at least sell some.

I had 120 shares of a company that went from $800 to $30,000 a share over about 2 years. I got my brother into the same company and he also bought 120 shares just a bit later than I did, so his entry was about $1020 a share. He told me when it hit $25K to sell or at least sell some. I didn't listen, I was GREEDY and also afraid of the tax bite. It subsequently dropped to $2,000 a share, stayed there for years. I finally sold at $3,500 two years ago. Of course it has since went up to $12K. :oops:

While my brother sold 65% at $25,000, 25% at $30,000 (he hit the very top) and 10% which he just sold for $12,000.

He made millions out of the deal, I made around $400K before taxes.

I take 100% of the blame. And to be honest, I still did well, so can't complain...but still do. :P
I’d like to verify this. Hard to believe a stock was out there that had a price of $30,000 share.
Tell us the name of the stock.

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watchnerd
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Re: Paralyzed by TSLA

Post by watchnerd » Wed Feb 05, 2020 4:56 pm

Shallowpockets wrote:
Wed Feb 05, 2020 4:51 pm

I’d like to verify this. Hard to believe a stock was out there that had a price of $30,000 share.
Tell us the name of the stock.
Split-adjusted, maybe?
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Financologist
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Re: Paralyzed by TSLA

Post by Financologist » Wed Feb 05, 2020 5:13 pm

I've been agonizing over a similar decision. Purchased at $278 in March and have been watching uncomfortably this meteoric rise. I promised myself as soon as the one-year short-term capital gains tax period elapsed I would sell it all and return to my senses. I never buy individual stocks and I am remembering why right now. Even though it's been rising I am not happy. Anxious and jittery and constantly checking stock prices is a Fool's game and I can't believe I allowed myself to play it. Yesterday it looked like a rubber band about to snap and I sold. Almost 60% of my Holdings allowing me to lock in a guaranteed gain on the position. Even if the rest of my shares go to zero. I sold into small chunks. At prices of $927 and $944. Feeling relieved and fortunate watching shares tumble Last night and today. That being said this stock could triple very easily over the next while. But that's not the point. No more individual stocks! Selllllll

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watchnerd
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Re: Paralyzed by TSLA

Post by watchnerd » Wed Feb 05, 2020 5:29 pm

Financologist wrote:
Wed Feb 05, 2020 5:13 pm
I've been agonizing over a similar decision. Purchased at $278 in March and have been watching uncomfortably this meteoric rise. I promised myself as soon as the one-year short-term capital gains tax period elapsed I would sell it all and return to my senses. I never buy individual stocks and I am remembering why right now. Even though it's been rising I am not happy. Anxious and jittery and constantly checking stock prices is a Fool's game and I can't believe I allowed myself to play it. Yesterday it looked like a rubber band about to snap and I sold. Almost 60% of my Holdings allowing me to lock in a guaranteed gain on the position. Even if the rest of my shares go to zero. I sold into small chunks. At prices of $927 and $944. Feeling relieved and fortunate watching shares tumble Last night and today. That being said this stock could triple very easily over the next while. But that's not the point. No more individual stocks! Selllllll
Sell?

You mean you don't think it's going to $7000 in the future?
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EdNorton
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Re: Paralyzed by TSLA

Post by EdNorton » Wed Feb 05, 2020 7:07 pm

KlangFool wrote:
Tue Feb 04, 2020 6:19 pm
OP,

My family member was holding a stock with 10 million worth of gain during Telecom bust. He knew that he should sell some of his holdings. But, he could not since the stock was gaining a few hundred thousand per week. In the end, he lost it all.

If you could not sell when you need to, you have no business gambling on the individual stock. I learned this lesson too late during Telecom bust. I lost 50% of my whole life savings during Telecom bust.

KlangFool
I have some friends who toasted Bernie Ebbers passing, they were not well diversified. :sharebeer
Outside a dog, a book is man's best friend, inside a dog, it's too dark to read - Groucho

KlangFool
Posts: 16579
Joined: Sat Oct 11, 2008 12:35 pm

Re: Paralyzed by TSLA

Post by KlangFool » Wed Feb 05, 2020 7:11 pm

Financologist wrote:
Wed Feb 05, 2020 5:13 pm
I've been agonizing over a similar decision. Purchased at $278 in March and have been watching uncomfortably this meteoric rise. I promised myself as soon as the one-year short-term capital gains tax period elapsed I would sell it all and return to my senses. I never buy individual stocks and I am remembering why right now. Even though it's been rising I am not happy. Anxious and jittery and constantly checking stock prices is a Fool's game and I can't believe I allowed myself to play it. Yesterday it looked like a rubber band about to snap and I sold. Almost 60% of my Holdings allowing me to lock in a guaranteed gain on the position. Even if the rest of my shares go to zero. I sold into small chunks. At prices of $927 and $944. Feeling relieved and fortunate watching shares tumble Last night and today. That being said this stock could triple very easily over the next while. But that's not the point. No more individual stocks! Selllllll
Financologist,

I have a simple rule when I gambled on the individual stock. I sell 50% of my holding when it triples. After that, even if it drops to zero, I had made my money.

KlangFool

Iris2
Posts: 9
Joined: Thu Feb 28, 2019 9:15 pm

Re: Paralyzed by TSLA

Post by Iris2 » Wed Feb 05, 2020 7:39 pm

greg24 wrote:
Tue Feb 04, 2020 5:03 pm
If/when the stock tumbles 20%, you're gonna be kicking yourself for not selling.
That happened today!

Iris2
Posts: 9
Joined: Thu Feb 28, 2019 9:15 pm

Re: Paralyzed by TSLA

Post by Iris2 » Wed Feb 05, 2020 7:40 pm

Trade stocks in your IRA and you won't have to worry about these taxable events.

User avatar
Wiggums
Posts: 2910
Joined: Thu Jan 31, 2019 8:02 am

Re: Paralyzed by TSLA

Post by Wiggums » Wed Feb 05, 2020 7:59 pm

KlangFool wrote:
Tue Feb 04, 2020 6:19 pm
OP,

My family member was holding a stock with 10 million worth of gain during Telecom bust. He knew that he should sell some of his holdings. But, he could not since the stock was gaining a few hundred thousand per week. In the end, he lost it all.

If you could not sell when you need to, you have no business gambling on the individual stock. I learned this lesson too late during Telecom bust. I lost 50% of my whole life savings during Telecom bust.

KlangFool
That telecom bust got my two coworkers as well. They lost 30 years worth savings in their 401k. I was lucky that I only had 40k in telecom at the time.

annu
Posts: 688
Joined: Mon Nov 04, 2019 7:55 pm

Re: Paralyzed by TSLA

Post by annu » Wed Feb 05, 2020 9:13 pm

Tsla reminds me of the bitcoin craze....can't wait for john McAfee to show up on tv and start making crazy bets for tslanto hit 10k

Financologist
Posts: 202
Joined: Wed Jan 01, 2020 11:16 pm

Re: Paralyzed by TSLA

Post by Financologist » Wed Feb 05, 2020 9:37 pm

I don't mess around in retirement accounts. The thought of an individual stock tanking and not being able to replenish the tax-advantaged account is too much to bear.

Also if I were an investor in individual stocks I would probably want them in taxable account s anyhow for tax-loss harvesting purposes.
Iris2 wrote:
Wed Feb 05, 2020 7:40 pm
Trade stocks in your IRA and you won't have to worry about these taxable events.

Financologist
Posts: 202
Joined: Wed Jan 01, 2020 11:16 pm

Re: Paralyzed by TSLA

Post by Financologist » Wed Feb 05, 2020 9:42 pm

KlangFool, I tried to sell at triple, but the stock was rising too quickly, and I was forced to sell nearly at quadruple. I'm committed to waiting another 40 Days so I don't pay short-term cap gains on the whole lot.
KlangFool wrote:
Wed Feb 05, 2020 7:11 pm
Financologist wrote:
Wed Feb 05, 2020 5:13 pm
I've been agonizing over a similar decision. Purchased at $278 in March and have been watching uncomfortably this meteoric rise. I promised myself as soon as the one-year short-term capital gains tax period elapsed I would sell it all and return to my senses. I never buy individual stocks and I am remembering why right now. Even though it's been rising I am not happy. Anxious and jittery and constantly checking stock prices is a Fool's game and I can't believe I allowed myself to play it. Yesterday it looked like a rubber band about to snap and I sold. Almost 60% of my Holdings allowing me to lock in a guaranteed gain on the position. Even if the rest of my shares go to zero. I sold into small chunks. At prices of $927 and $944. Feeling relieved and fortunate watching shares tumble Last night and today. That being said this stock could triple very easily over the next while. But that's not the point. No more individual stocks! Selllllll
Financologist,

I have a simple rule when I gambled on the individual stock. I sell 50% of my holding when it triples. After that, even if it drops to zero, I had made my money.

KlangFool

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