(Sort Of) Unexpected Outcome from Risky Maneuver

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traderjoe55
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(Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

Long time lurker here. Had been essentially 100% VTI in all accounts (taxable and tax deferred) up until around April. For a few reasons, decided to liquidate all positions and scoop up a few stocks that had been destroyed by COVID. I knew this was risky but was willing to take the risk for a variety of reasons. These positions have now returned 100-300% in a very short period of time.

In my best estimate, I thought if this gamble were to pay off it would take years at best. Now I'm left with the decision of what to do. Do I sell all and go back to index investing? The tax bill would be enormous. Wait a year to reduce that? The gains are substantial but not enough to quit working. I was thinking of selling all in the tax-advantaged accounts and waiting a year in the taxables before liquidating for tax purposes.

I realize this is sort of asking to foretell the future but would appreciate some thoughts. I can provide more detail on holdings and personal financial situation but not sure if it would be useful.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by livesoft »

I might do something different if this was $50,000 or $500,000 worth or $5,000,000.

For $50,000, I would just go back to VTI over the next few months.

For $500,000, I would go back for some of it (say all the tax-advantaged accounts), but earmark the taxable as dead money to donate to charity next year after holding for one year.

For $5,000,000, I would cash in and retire.
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JoMoney
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by JoMoney »

I don't think it's worthwhile to hang on to a position for tax purposes if you think the potential risk would be more than you can handle.
That is, I would not base the decision on some unknowable probability of potential gains at a lower tax rate, but on my willingness to bear the consequences of the potential bad outcomes.
I don't know that whatever your position is more or less risky than a broad-market index holding, but that's why I probably wouldn't have done whatever you did in the first place. Congrats on what sounds like a good outcome (so far)...
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anon_investor
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by anon_investor »

I would sell all shares in tax advantaged accounts and move back into index funds. I would do this right away.

More information about your tax brackets is needed to determine how to best proceed with your taxable holdings.
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Watty
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Watty »

Selling the stocks in the tax differed accounts to get back to a conventional investing plan is an easy choice since there are no tax consequences. I would do that the first thing Monday morning.

You need to figure out your taxes two ways, as if you sell them now and as if you hold them until the gains are long term gains and sell them next spring.

You will most likely have a large tax bill no matter what you do, but that is a good problem to have.

The stocks could go down a lot more than the difference by the time the gains become long term capital gains next year.

Deferring the taxes is not the same as dramatically reducing the amount of taxes that you will eventually pay.

I have never used them so I know little about the details of how they work but you could also look into using stock options to protect your gains until they become long term. After the cost of the options I doubt that they you would save enough in taxes to make them be worthwhile.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by bertilak »

traderjoe55 wrote: Sun Jun 07, 2020 9:28 am Long time lurker here. Had been essentially 100% VTI in all accounts (taxable and tax deferred) up until around April. For a few reasons, decided to liquidate all positions and scoop up a few stocks that had been destroyed by COVID. I knew this was risky but was willing to take the risk for a variety of reasons. These positions have now returned 100-300% in a very short period of time.

In my best estimate, I thought if this gamble were to pay off it would take years at best. Now I'm left with the decision of what to do. Do I sell all and go back to index investing? The tax bill would be enormous. Wait a year to reduce that? The gains are substantial but not enough to quit working. I was thinking of selling all in the tax-advantaged accounts and waiting a year in the taxables before liquidating for tax purposes.

I realize this is sort of asking to foretell the future but would appreciate some thoughts. I can provide more detail on holdings and personal financial situation but not sure if it would be useful.
Do you have offsetting losses from that liquidation? Your tax situation may not be as bad as you think.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by 1789 »

I would take the money and leave the casino regardless of tax impact
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Yinks »

I'm always curious why people worry so much about the tax implications of selling a stock. Let's do the math here.

WORST case scenario, if you sell short term you owe 37%, long term 20% so the difference is 17%. Actually its possible to be in the 35% fed bracket and owe 15% on long term capital gains so the difference is 20%

So we are talking about at worst a 20% difference in tax on the profit from the sale.

Let's now ask ourselves how much the stock price needs to drop between now (short term sale) and april 2021 (long term sale) to be equivalent to the difference in taxes you will pay.

Let's take the stock that went up 100%. A 10% drop in stock price cuts your profit by 20%. For the stock up 300% a 15% price drop cuts you profit by 20%.

So when people ask "should I sell now or later to save on taxes?" they are inherently assuming the stock price will not go down. In your case your are assuming that the price will not drop more than 10 to 15% in the next 10 months.

Maybe I'm missing something here or doing the math wrong? Or maybe you have high faith in the price of said individual stocks.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by bgf »

If you sell now and go back to indexing, you can't do worse than the market. Your outperformance is locked in.

If you let it ride... you can do far worse.

You took advantage of a special situation, has it changed?
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traderjoe55
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

Thanks for the thoughts from everyone it’s helped a lot. Will sell in tax advantages accounts and 25% of taxable.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by dziuniek »

Sounds like a plan!

Regarding the outperformance, I'm up 7.25% in my primary retirement account. Should sell the riskier parts of it, go all in on SP500 and claim I beat 99% of fund managers for 2020. :twisted:
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by dukeblue219 »

Yinks wrote: Sun Jun 07, 2020 11:11 am I'm always curious why people worry so much about the tax implications of selling a stock.
I'm with you. You have a tax bill because you made so much profit. Hardly a bad thing. I swear some people are happiest when they have losses to harvest.

Move it somewhere safer and count your blessings that the gamble (or shrewd maneuver?) paid off. Reserve a chunk to pay the taxes.

In 9 months my advice would be different, but stretching to make it a LT gain at this point is a lot of risk.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by 3funder »

dukeblue219 wrote: Sun Jun 07, 2020 12:09 pm
Yinks wrote: Sun Jun 07, 2020 11:11 am I'm always curious why people worry so much about the tax implications of selling a stock.
I'm with you. You have a tax bill because you made so much profit. Hardly a bad thing. I swear some people are happiest when they have losses to harvest.

Move it somewhere safer and count your blessings that the gamble (or shrewd maneuver?) paid off. Reserve a chunk to pay the taxes.

In 9 months my advice would be different, but stretching to make it a LT gain at this point is a lot of risk.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

Update: I ended up not selling.

Mostly this was because I am on the cusp of starting work in a very reliable field (yes it’s medicine) and have in my mind a guaranteed income. This is why I took the risk—lose 2-3 years of pay or change things completely.

So I’m pretty sure I could actually retire which was never the goal but that’s what it turned into. The amount this experiment turned into is almost 8 figures.

This may sound stupid but I worked so hard for so long to prepare for attendinghood but it just doesn’t excite me like it used to.

I’m not retiring but I admit I feel lost now. I’m not trying to brag or seek attention but I’m trying to decide how to handle this.

My overall plan is to work but in a dream locale and an easier job instead of killing myself for 5-10 years in a remote location. It sounds good on paper but still doesn’t excite me. I have lost my passion.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by toast0 »

Now that you've waited long enough to get long term capital gains, you may as well sell significantly more to diversify (and/or donate some appreciated shares). Windfalling into 8 figures at the cusp of starting of your career will definitely mess up your plan. 7 figures at the start of your career is probably enough to let you do anything, but not to comfortably do nothing (unless you're really skilled at doing nothing); but 8 figures certainly lets you do nothing comfortably.

When you started down the long road to a medical career, what were the things that motivated you? Was it just the financial prospects, or did you have a more altruistic motive? Could you use your windfall to focus on practicing medicine in ways that give you good feels rather than good finances (because you're already set on finances)? I'm sure many of those situations are actually a lot harder work than a regular practice, but there may be an opportunity for balance there (I'd also guess a lot of those situations would prefer you to have some traditional practice experience first, even after the years and years of school and training and residency, etc).
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Stinky »

toast0 wrote: Sun Jun 27, 2021 1:09 pm Now that you've waited long enough to get long term capital gains, you may as well sell significantly more to diversify (and/or donate some appreciated shares). Windfalling into 8 figures at the cusp of starting of your career will definitely mess up your plan. 7 figures at the start of your career is probably enough to let you do anything, but not to comfortably do nothing (unless you're really skilled at doing nothing); but 8 figures certainly lets you do nothing comfortably.

When you started down the long road to a medical career, what were the things that motivated you? Was it just the financial prospects, or did you have a more altruistic motive? Could you use your windfall to focus on practicing medicine in ways that give you good feels rather than good finances (because you're already set on finances)? I'm sure many of those situations are actually a lot harder work than a regular practice, but there may be an opportunity for balance there (I'd also guess a lot of those situations would prefer you to have some traditional practice experience first, even after the years and years of school and training and residency, etc).
+1

Having money like this gives you options. Options to work a little less, give a little more, spend a little more, etc. That’s the way I’d view it. You have many more options than most folks who are at your station in life.

You’ve spent so long in getting to the point of becoming an attending. Give it a real try.
Last edited by Stinky on Sun Jun 27, 2021 2:52 pm, edited 1 time in total.
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Watty
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Watty »

traderjoe55 wrote: Sun Jun 27, 2021 12:26 pm Update: I ended up not selling.
As I said in my prior post;
Watty wrote: Sun Jun 07, 2020 10:00 am Deferring the taxes is not the same as dramatically reducing the amount of taxes that you will eventually pay.
It would be good to have a plan to eventually sell at least a large part of them.

I cannot predict the future and we cannot discus politics on this board but there is a risk if you delay selling them for a few years then you could end up selling them when tax rates are even higher.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

Stinky wrote: Sun Jun 27, 2021 1:34 pm
toast0 wrote: Sun Jun 27, 2021 1:09 pm Now that you've waited long enough to get long term capital gains, you may as well sell significantly more to diversify (and/or donate some appreciated shares). Windfalling into 8 figures at the cusp of starting of your career will definitely mess up your plan. 7 figures at the start of your career is probably enough to let you do anything, but not to comfortably do nothing (unless you're really skilled at doing nothing); but 8 figures certainly lets you do nothing comfortably.

When you started down the long road to a medical career, what were the things that motivated you? Was it just the financial prospects, or did you have a more altruistic motive? Could you use your windfall to focus on practicing medicine in ways that give you good feels rather than good finances (because you're already set on finances)? I'm sure many of those situations are actually a lot harder work than a regular practice, but there may be an opportunity for balance there (I'd also guess a lot of those situations would prefer you to have some traditional practice experience first, even after the years and years of school and training and residency, etc).
+1

Having money like this gives you options. Options to work a little less, give a little more, spend a little more, etc. That’s the way I’d view it. You have many more options than most folks who are at your station in life.

You’ve spent so long in getting to the point of becoming an attending. Give it a real try.
Thanks for the advice. Will give it a try at least for a year or two.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by chassis »

Sell if you think the economic prospects of your holdings have changed, or if you have a better alternative.

Do you think the economic prospects of your holdings have changed? Do you have a better alternative?

The “risky maneuver” was done by many thousands of investors. It’s called buying the dip.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by KlangFool »

OP,

My family member earned 7 figures in annual salary and bonuses while worked in Wall Street. He had 10 millions worth of gain during Telecom Boom. He did not sell. He lost the whole 10 million after Telecom Bust.

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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by KlangFool »

OP,

I rebalanced in March 2020 with my 60/40 portfolio. I rebalanced again after the market recovered. I made close to 100% gain with my stock purchase in March 2020.

Maintaining a fixed AA is a very good "market timing" tool.

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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Parkinglotracer »

First world problem congrats !

As a bogle head i would not have invested this way as I don’t think it is the path to long term success. If I was as lucky as you were to make huge individual short term stock gains in a taxable account I’d sell them and buy indexes VTI / VXUS / BND or shorter duration bond index as appropriate for my long term plan. If for tax reasons you don’t want to sell the huge gains now and you don’t want to take the risk your lucky gains will go back down you can buy put options that give you the option to sell that stock at a set price thus locking in the gains while you get out of the trading business.

Obviously the price of the options will have to be weighed with the tax advantages of the difference in long term and short term capital gains rates. May not be worth the pain and complexity of the option trades.

In the future Maybe set aside 10% of your portfolio in a tax deferred account and trade away tax deferred …

good luck

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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

Well I’m done with fellowship in a month. Took an attending job.

This sounds ridiculous but account value is just shy of 20 mil. I think I could retire but we don’t own a home and kids are young. Feels too risky but I realize 20 mil is nothing to sneeze at even with inflation.

I also am not sure what I would even do if I didn’t work.

I’m thinking I’ll work for a year and if things go well with work and trading to maybe go to part time? The goalposts keep moving in my mind—would I really do something different at 30mil?

Edit: Part of my hesitation is that no one else knows maybe—-started with 233k during COVID. Wife leaves all finances up to me. Haven’t told anyone else.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by anon_investor »

traderjoe55 wrote: Sat May 28, 2022 6:21 pm Well I’m done with fellowship in a month. Took an attending job.

This sounds ridiculous but account value is just shy of 20 mil. I think I could retire but we don’t own a home and kids are young. Feels too risky but I realize 20 mil is nothing to sneeze at even with inflation.

I also am not sure what I would even do if I didn’t work.

I’m thinking I’ll work for a year and if things go well with work and trading to maybe go to part time? The goalposts keep moving in my mind—would I really do something different at 30mil?

Edit: Part of my hesitation is that no one else knows maybe—-started with 233k during COVID. Wife leaves all finances up to me. Haven’t told anyone else.
Did you derisk any?
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

anon_investor wrote: Sat May 28, 2022 6:28 pm
traderjoe55 wrote: Sat May 28, 2022 6:21 pm Well I’m done with fellowship in a month. Took an attending job.

This sounds ridiculous but account value is just shy of 20 mil. I think I could retire but we don’t own a home and kids are young. Feels too risky but I realize 20 mil is nothing to sneeze at even with inflation.

I also am not sure what I would even do if I didn’t work.

I’m thinking I’ll work for a year and if things go well with work and trading to maybe go to part time? The goalposts keep moving in my mind—would I really do something different at 30mil?

Edit: Part of my hesitation is that no one else knows maybe—-started with 233k during COVID. Wife leaves all finances up to me. Haven’t told anyone else.
Did you derisk any?
Not sure how to answer this—-none of it is in cash per se.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by anon_investor »

traderjoe55 wrote: Sat May 28, 2022 6:47 pm
anon_investor wrote: Sat May 28, 2022 6:28 pm
traderjoe55 wrote: Sat May 28, 2022 6:21 pm Well I’m done with fellowship in a month. Took an attending job.

This sounds ridiculous but account value is just shy of 20 mil. I think I could retire but we don’t own a home and kids are young. Feels too risky but I realize 20 mil is nothing to sneeze at even with inflation.

I also am not sure what I would even do if I didn’t work.

I’m thinking I’ll work for a year and if things go well with work and trading to maybe go to part time? The goalposts keep moving in my mind—would I really do something different at 30mil?

Edit: Part of my hesitation is that no one else knows maybe—-started with 233k during COVID. Wife leaves all finances up to me. Haven’t told anyone else.
Did you derisk any?
Not sure how to answer this—-none of it is in cash per se.
Is it all still in individual stocks?
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by KingRiggs »

My math is a little fuzzy here...

You started with $233k, which returned 100-300% during Covid (taking you just shy of $1M). I'm sure it continued to go up during 2021 as well. But then 2022 has come along, with declines in most sectors. And you now say you are sitting on $20 MILLION? That is...difficult to wrap one's head around.

Perhaps you should consider running a hedge fund instead of medicine...

I'd retire immediately. You have more than you'll likely spend over the nest 50 years. Congrats.
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traderjoe55
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

KingRiggs wrote: Sat May 28, 2022 6:53 pm My math is a little fuzzy here...

You started with $233k, which returned 100-300% during Covid (taking you just shy of $1M). I'm sure it continued to go up during 2021 as well. But then 2022 has come along, with declines in most sectors. And you now say you are sitting on $20 MILLION? That is...difficult to wrap one's head around.

Perhaps you should consider running a hedge fund instead of medicine...

I'd retire immediately. You have more than you'll likely spend over the nest 50 years. Congrats.
Yes…about 8000% increase. I have no illusions about some amazing ability I have…just have spent more time reading and studying the markets than on my actual job the last two years to be honest and probably have a hot hand right now. There have been plenty of names over the years who have been hailed as amazing oracles and then turn to ruin.

My maximum draw down over the past two years was 20%……don't use any margin. It’s like not I own any stocks I didn’t when I first started this post.

I guess you could say this is my hobby? I don’t have any formal training—just self taught.

Anyways I wouldn’t have the first idea about doing any hedge fund stuff. Sounds like paperwork and clerical stuff which I despise.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

anon_investor wrote: Sat May 28, 2022 6:48 pm
traderjoe55 wrote: Sat May 28, 2022 6:47 pm
anon_investor wrote: Sat May 28, 2022 6:28 pm
traderjoe55 wrote: Sat May 28, 2022 6:21 pm Well I’m done with fellowship in a month. Took an attending job.

This sounds ridiculous but account value is just shy of 20 mil. I think I could retire but we don’t own a home and kids are young. Feels too risky but I realize 20 mil is nothing to sneeze at even with inflation.

I also am not sure what I would even do if I didn’t work.

I’m thinking I’ll work for a year and if things go well with work and trading to maybe go to part time? The goalposts keep moving in my mind—would I really do something different at 30mil?

Edit: Part of my hesitation is that no one else knows maybe—-started with 233k during COVID. Wife leaves all finances up to me. Haven’t told anyone else.
Did you derisk any?
Not sure how to answer this—-none of it is in cash per se.
Is it all still in individual stocks?
Oh, yes. Wasn’t sure what you were asking earlier.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by HMSVictory »

$20M? That's it? Hot hand is $100M+ in 6 months come on man!



Listen if this is true... and I'm skeptical to say the least (8000% return - right) if you keep doing stuff like this you will end up bankrupt. Your gambling (well apparently) but this is not investing. You aren't going to be able to repeat this or keep doing this for 2, 3 4 or 5 decades.



Is this you Elon? If so I retract my statement and go for the grand slam!!!!!!!
Stay the course!
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by HMSVictory »

traderjoe55 wrote: Sat May 28, 2022 7:05 pm
anon_investor wrote: Sat May 28, 2022 6:48 pm
traderjoe55 wrote: Sat May 28, 2022 6:47 pm
anon_investor wrote: Sat May 28, 2022 6:28 pm
traderjoe55 wrote: Sat May 28, 2022 6:21 pm Well I’m done with fellowship in a month. Took an attending job.

This sounds ridiculous but account value is just shy of 20 mil. I think I could retire but we don’t own a home and kids are young. Feels too risky but I realize 20 mil is nothing to sneeze at even with inflation.

I also am not sure what I would even do if I didn’t work.

I’m thinking I’ll work for a year and if things go well with work and trading to maybe go to part time? The goalposts keep moving in my mind—would I really do something different at 30mil?

Edit: Part of my hesitation is that no one else knows maybe—-started with 233k during COVID. Wife leaves all finances up to me. Haven’t told anyone else.
Did you derisk any?
Not sure how to answer this—-none of it is in cash per se.
Is it all still in individual stocks?
Oh, yes. Wasn’t sure what you were asking earlier.
Counting your chips while your still at the table huh?
Stay the course!
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by makingmistakes »

HMSVictory wrote: Sat May 28, 2022 7:15 pm $20M? That's it? Hot hand is $100M+ in 6 months come on man!



Listen if this is true... and I'm skeptical to say the least (8000% return - right) if you keep doing stuff like this you will end up bankrupt. Your gambling (well apparently) but this is not investing. You aren't going to be able to repeat this or keep doing this for 2, 3 4 or 5 decades.



Is this you Elon? If so I retract my statement and go for the grand slam!!!!!!!
I’m skeptical because 100-300% is now 8000%. Got to keep the story straight to make it believable.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

I don’t pretend to be any better than anyone else at stock picking—freely admitted.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by er999 »

Do you mind sharing a little of the details of how it happened? Buy and hold for 2 years? Change positions every few weeks? Did you use leveraged etfs? I think it’s plausible and is the dream that you have to give up with index fund only investing.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by ccf »

traderjoe55 wrote: Sun Jun 07, 2020 9:28 am In my best estimate, I thought if this gamble were to pay off it would take years at best. Now I'm left with the decision of what to do. Do I sell all and go back to index investing? The tax bill would be enormous. Wait a year to reduce that?
Yes, sell it all and go back to index investing. Don't try your luck!
traderjoe55 wrote: Sun Jun 07, 2020 9:28 amThe goalposts keep moving in my mind
yes this is dangerous your brain is messing with you. If you are up millions, take your profits and pay the taxes and STOP TRADING omg.

agree with the poster that said "if you keep doing stuff like this you will end up bankrupt"
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traderjoe55
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

er999 wrote: Sat May 28, 2022 7:35 pm Do you mind sharing a little of the details of how it happened? Buy and hold for 2 years? Change positions every few weeks? Did you use leveraged etfs? I think it’s plausible and is the dream that you have to give up with index fund only investing.
As I mentioned originally, I was 100% VTI. COVID happened and compared to certain stocks VTI was relatively spared. I sold it all and started trading—exactly what would take too much time to detail.

I don’t want to derail this thread with the past but I am no rookie to trading/markets/economics (I have a degree in it for what it’s worth). For example I was no stranger to option trading/futures/fibs/fed funds rate/commodities/CDS, etc when COVID hit. I believe I am an extreme minority of physicians who understand money/finance (somewhat). I am also very frugal but that is a whole different discussion—I would rather eat peanut butter and graham crackers from the nourishment room than buy something in the cafeteria(other residents/fellows will get this reference).
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anon_investor
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by anon_investor »

traderjoe55 wrote: Sat May 28, 2022 8:05 pm
er999 wrote: Sat May 28, 2022 7:35 pm Do you mind sharing a little of the details of how it happened? Buy and hold for 2 years? Change positions every few weeks? Did you use leveraged etfs? I think it’s plausible and is the dream that you have to give up with index fund only investing.
As I mentioned originally, I was 100% VTI. COVID happened and compared to certain stocks VTI was relatively spared. I sold it all and started trading—exactly what would take too much time to detail.

I don’t want to derail this thread with the past but I am no rookie to trading/markets/economics (I have a degree in it for what it’s worth). For example I was no stranger to option trading/futures/fibs/fed funds rate/commodities/CDS, etc when COVID hit. I believe I am an extreme minority of physicians who understand money/finance (somewhat). I am also very frugal but that is a whole different discussion—I would rather eat peanut butter and graham crackers from the nourishment room than buy something in the cafeteria(other residents/fellows will get this reference).
Curious why you didn't move at least some of it back into VTI.
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AnnetteLouisan
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by AnnetteLouisan »

Why not stash $5mil somewhere safe and keep investing the rest as you have been. Don’t quit work. Just go around as usual, but humming to yourself. If your wife knows, make sure she understands how important it is not to tell a soul.

Or just sell it all to lock it in and start over investing with your salary.
Last edited by AnnetteLouisan on Sun May 29, 2022 7:32 am, edited 2 times in total.
er999
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by er999 »

Personally I’d pay the tax bill and go back to vti / vxus / some bonds. I’m a hospitalist in practice 17 years and remember how exciting it was the first year or two in practice so I understand you still wanting to work. It’s doubtful you’ll feel the same way 15 years later so don’t blow this opportunity. Even 5 million is enough money to walk away so just pay the tax. If you work even part time you should have a very nice lifestyle with that amount as a base. You can also have a niche practice tailored to only the patients you like if you don’t need to maximize income.

I had a very sucky shift yesterday with constant pages and unstable patients working until midnight on a Friday night. I still have another decade of work to go if I’m lucky (only boglehead investing for the last 17 years including a large international percentage so slow steady progress only) and should feel fortunate compared to many workers that I may be done in mid to late 50s. It’s still depressing to be looking at another decade of hard, stressful work without any other options after a shift like that.

My colleagues who are nocturnists were saying yesterday how several of them were thinking about quitting as the group reneged on their hiring promise to keep them at the same hospital and are going to force them to a different hospital where they have to do icu. One person hasn’t done icu for 17 years but will have to now or quit.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Watty »

The only types of investments that I can imagine where you could make so much so quickly would also be subject to quick losses.

It was a totally different time but back in the roaring 20s (1920s) the legendary investor Jessie Livermore was one of the quintessential wall street "operators" as they call them back then and some say he invented technical analysis. He made and lost several fortunes. There have been several books about him that you might be interested in reading.

One thing that was interesting was that during his boom times he put some money into a trust that he could not touch since he knew that with his risky investments he could lose everything. Eventually he did lose it all and it was fortunate that he had put the money into a trust since his family ended up living on that.

Putting some of your money into some sort of irrevocable trust(with the advice of a lawyer) in conventional index funds might not be a bad idea not only in case your investing takes a bad turn, but also because it might provide some protection against malpractice.
traderjoe55 wrote: Sat May 28, 2022 8:05 pm I sold it all and started trading—exactly what would take too much time to detail.

I don’t want to derail this thread with the past but I am no rookie to trading/markets/economics (I have a degree in it for what it’s worth). For example I was no stranger to option trading/futures/fibs/fed funds rate/commodities/CDS, etc when COVID hit. I believe I am an extreme minority of physicians who understand money/finance (somewhat).
You need to be careful.

For all we know you could have a unique set of skills but the problem is that it is not all that hard to duplicate those skills with a team of analysis. Even if you are the smartest person in the world that does not mean that you will be smarter than a team of people.

One thing I have seen over and over is that often a mutual fund manager or stock buying stragety will do great, until it doesn't. The problem is not that the mutual fund manager or stragety changed it is that the markets changed. Whatever you are doing may not work as the pandemic ends, interest rates go up, or any of a dozen other things change.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by shess »

This thread reminds me of my son's opinions. I retired very early, and he thinks I'm stupid. Why, I could have a bunch of houses, and we could take all sorts of additional vacations! I could get a McLaren! He doesn't seem to care that I already have what I consider to be the correct number of houses, and I already take the trips I wish to take, my crummy car serves me well, and I've worked hard to stop defaulting to being cheap on everything, so adding more would be a burden which I wouldn't really enjoy.

The amount of risk I would take to turn $20M into $100M is just about zero, because at $20M, I would consider myself to be basically "there". Don't get me wrong, I wouldn't mind taking a crack at having $100M, it seems like an interesting problem to have! But it would be entirely an acadmic exercise, it wouldn't really change my day-to-day. On the other hand, if I were to go from $20M to $5M or $2M because I was greedy? It would have a huge impact on my day-to-day, and I would feel like an idiot, likely for the rest of my life.

I would harvest half of those gains, pay off any debts, and sock the balance into 30% VTI, 30% VXUS, and 40% BND. Then go ahead and keep spinning the wheel, limiting yourself to only betting with the speculative portion. Half of absurdly wealthy is still absurdly wealthy.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Stinky »

Watty wrote: Sat May 28, 2022 9:19 pm The only types of investments that I can imagine where you could make so much so quickly would also be subject to quick losses.
Excellent one-sentence summary of your situation.

traderjoe, you've accumulated an amazing amount of wealth in a very short period of time. You either have a true knack for making money in investments, have been incredibly lucky over the past couple of years, or both.

My suggestions -
---- Liquidate all but a nominal percentage of your positions. Maybe keep 5% or 10% (that would be $1M or $2M).
---- Pay the taxes on the liquidated positions.
---- Invest the net proceeds after taxes into index equity funds - Total Stock Market, S&P 500, Total International, etc.
---- Continue to use your money-making prowess on the "nominal percentage" that you didn't liquidate. If your golden touch continues to work, you'll increase your wealth even more; if it doesn't work and you lose it all, you still have 90-95% of your wealth.

The benefit of taking most of the money off the table is that you'll be able to bank a life-changing amount of savings/investments, while continuing to scratch your trading itch with a significant amount of money (but an insignificant part of your net worth).
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Parkinglotracer »

shess wrote: Sun May 29, 2022 1:39 am This thread reminds me of my son's opinions. I retired very early, and he thinks I'm stupid. Why, I could have a bunch of houses, and we could take all sorts of additional vacations! I could get a McLaren! He doesn't seem to care that I already have what I consider to be the correct number of houses, and I already take the trips I wish to take, my crummy car serves me well, and I've worked hard to stop defaulting to being cheap on everything, so adding more would be a burden which I wouldn't really enjoy.

The amount of risk I would take to turn $20M into $100M is just about zero, because at $20M, I would consider myself to be basically "there". Don't get me wrong, I wouldn't mind taking a crack at having $100M, it seems like an interesting problem to have! But it would be entirely an acadmic exercise, it wouldn't really change my day-to-day. On the other hand, if I were to go from $20M to $5M or $2M because I was greedy? It would have a huge impact on my day-to-day, and I would feel like an idiot, likely for the rest of my life.

I would harvest half of those gains, pay off any debts, and sock the balance into 30% VTI, 30% VXUS, and 40% BND. Then go ahead and keep spinning the wheel, limiting yourself to only betting with the speculative portion. Half of absurdly wealthy is still absurdly wealthy.

Mr Bogle expresses your exact sentiment in his book enough. When someone asked him how much he has and why he doesn’t do x and y he says I have enough. People are not very good at being satisfied with enough. I try to be thankful everyday although my enough sounds much less that your enough :0

congrats on making peace with enough.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by AnnetteLouisan »

Watty wrote: Sat May 28, 2022 9:19 pm The only types of investments that I can imagine where you could make so much so quickly would also be subject to quick losses.

It was a totally different time but back in the roaring 20s (1920s) the legendary investor Jessie Livermore was one of the quintessential wall street "operators" as they call them back then and some say he invented technical analysis. He made and lost several fortunes. There have been several books about him that you might be interested in reading.

One thing that was interesting was that during his boom times he put some money into a trust that he could not touch since he knew that with his risky investments he could lose everything. Eventually he did lose it all and it was fortunate that he had put the money into a trust since his family ended up living on that.

Putting some of your money into some sort of irrevocable trust(with the advice of a lawyer) in conventional index funds might not be a bad idea not only in case your investing takes a bad turn, but also because it might provide some protection against malpractice.
traderjoe55 wrote: Sat May 28, 2022 8:05 pm I sold it all and started trading—exactly what would take too much time to detail.

I don’t want to derail this thread with the past but I am no rookie to trading/markets/economics (I have a degree in it for what it’s worth). For example I was no stranger to option trading/futures/fibs/fed funds rate/commodities/CDS, etc when COVID hit. I believe I am an extreme minority of physicians who understand money/finance (somewhat).
You need to be careful.

For all we know you could have a unique set of skills but the problem is that it is not all that hard to duplicate those skills with a team of analysis. Even if you are the smartest person in the world that does not mean that you will be smarter than a team of people.

One thing I have seen over and over is that often a mutual fund manager or stock buying stragety will do great, until it doesn't. The problem is not that the mutual fund manager or stragety changed it is that the markets changed. Whatever you are doing may not work as the pandemic ends, interest rates go up, or any of a dozen other things change.
In the book Hard Times, by Studs Terkel, they interview the person who leant $5,000 to Livermore in his final days before he voluntarily accelerated his departure date from this world. The book is about how people from all walks of life, including the finance world and upper class, musicians and porters, farmers and homemakers, dealt with their changed fortunes in the Great Depression.

I agree with the commenters who noted the temptation in your case might be to think you can turn it into $100 million. Maybe you can but as I said I would keep $5 mil somewhere safe just in case. Selling half, or a third, in taxable for short term cap gains and waiting a year on the other half seems reasonable. Buying a nice home might be an option since you mentioned you don’t have one. Anyway - congratulations! And make sure to keep it under your hat, which can’t be easy. The handling a windfall section of the wiki is also excellent.
Last edited by AnnetteLouisan on Sun May 29, 2022 3:36 pm, edited 2 times in total.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Dave55 »

AnnetteLouisan wrote: Sat May 28, 2022 8:19 pm Why not stash $5mil somewhere safe and keep investing the rest as you have been. Don’t quit work. Just go around as usual, but humming to yourself. If your wife knows, make sure she understands how important it is not to tell a soul.

Or just sell it all to lock it in and start over investing with your salary.
Excellent advice Annette.

Dave
"Reality always wins, your only job is to get in touch with it." Wilfred Bion
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by clip651 »

traderjoe55 wrote: Sat May 28, 2022 8:05 pm I am also very frugal but that is a whole different discussion—I would rather eat peanut butter and graham crackers from the nourishment room than buy something in the cafeteria(other residents/fellows will get this reference).
You could at least buy your own peanut butter and graham crackers at this point. :shock: You sound pretty detached from reality, between this and apparently not setting aside much of anything in cash/bonds/CDs or stock index funds, instead apparently leaving everything in your risky investment portfolio.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by scorcher31 »

If it was me, I would move 10 million from the risky investments to move conservative us/international and bond funds. With whatever you have left pay the taxes and feel free to play with as you have been doing. There you are pretty much Financially independent. You don't need to save another penny. Just work for what you spend.
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by Young Boglehead »

I think you should stash whatever you would need to live on your expected doctor salary in perpetuity into a reasonable investment plan, and feel free to go hog wild with the rest.

If you’re as good as you think you are you couldn’t make another 20M starting out with a few M? Don’t you believe in yourself?!

But honestly it doesn’t even sound like you’d get much value out of more than you have. If that’s the case what would the point be of risking it all for more? On the other hand, how would you feel if you were back to square 1 or worse?
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by muffins14 »

It would be a very very good idea to sell a large chunk of this and diversify.

Much better than telling your wife about how you lost $10-$15M because you thought XYZ
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Re: (Sort Of) Unexpected Outcome from Risky Maneuver

Post by traderjoe55 »

Update: right over 30M now. will be selling all Tuesday and figure out what to do with my life. Thanks for the advice.
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