Stock Market
- Thread starter JHDK
- Start date
So I had a long chat with my aunt and uncle last night and they feel that I should sell a portion of my Facebook stock. My uncle wants to sell half and my aunt says a quarter. They are concerned about the stuff going down in Australia along with the looming antitrust suit.
Facebook, as I keep saying, has been a huge moneymaker. Now it doesn't pay a dividend but it's clearly a growth stock. Hendrik bought it at $65 and it closed yesterday at $269.39.
Now apparently if I sell I will have to pay capital gains tax. The good news apparently is that I pay it on the difference between the price it was when Hendrik died ($180) and now, not from when he initially bought it. This is all stuff I know very little about and have to learn in the next 34 months. It's actually quite fascinating.
Anyway, I normally just blindly do whatever they suggest. However in this case I have reservations. I'm leaning towards splitting the difference between the two of them and selling 3/8ths. Facebook is a somewhat big portion of my entire portfolio so it's probably a good idea to diversify a bit more. However, we don't know what we would reinvest into yet. Of course it would be nice to put it into stocks that pay dividends because that helps supplement my day to day life, but at the same time I also would like to grow the portfolio as much as possible so when I take over it is healthier than ever. Either way, for a while a rather large chunk of cash is just going to sit in the TD account doing nothing while we decide and that's no good.
We ended the conversation saying we would keep an eye on it for a couple more weeks then make the final decision.
Your thoughts?
(Additionally, it's not lost on me that this entire post would also fit well in the First World Problems thread.)
Facebook, as I keep saying, has been a huge moneymaker. Now it doesn't pay a dividend but it's clearly a growth stock. Hendrik bought it at $65 and it closed yesterday at $269.39.
Now apparently if I sell I will have to pay capital gains tax. The good news apparently is that I pay it on the difference between the price it was when Hendrik died ($180) and now, not from when he initially bought it. This is all stuff I know very little about and have to learn in the next 34 months. It's actually quite fascinating.
Anyway, I normally just blindly do whatever they suggest. However in this case I have reservations. I'm leaning towards splitting the difference between the two of them and selling 3/8ths. Facebook is a somewhat big portion of my entire portfolio so it's probably a good idea to diversify a bit more. However, we don't know what we would reinvest into yet. Of course it would be nice to put it into stocks that pay dividends because that helps supplement my day to day life, but at the same time I also would like to grow the portfolio as much as possible so when I take over it is healthier than ever. Either way, for a while a rather large chunk of cash is just going to sit in the TD account doing nothing while we decide and that's no good.
We ended the conversation saying we would keep an eye on it for a couple more weeks then make the final decision.
Your thoughts?
(Additionally, it's not lost on me that this entire post would also fit well in the First World Problems thread.)
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Keep doing your research, but diversification is good.
I haven’t read up on what smart people expect FB to do, but it seems to me like it’s big growth period has likely already passed. I don’t see where their product can branch out Like Amazon did.
If there’s a new hedge fund targeting Game Stop to drop get in on that. Everyone that bought into GS a couple of weeks ago and still has it, is going to lose their shirts soon. The company isn’t suddenly turning a major profit.
PS
Don‘t take any of my investment advice. I know less than squat about the market. My philosophy is to put more into my 401k than my employer matches, and don’t open my statements when the market is bad. It actually works, but someone that knows better, can probably make more money.
I haven’t read up on what smart people expect FB to do, but it seems to me like it’s big growth period has likely already passed. I don’t see where their product can branch out Like Amazon did.
If there’s a new hedge fund targeting Game Stop to drop get in on that. Everyone that bought into GS a couple of weeks ago and still has it, is going to lose their shirts soon. The company isn’t suddenly turning a major profit.
PS
Don‘t take any of my investment advice. I know less than squat about the market. My philosophy is to put more into my 401k than my employer matches, and don’t open my statements when the market is bad. It actually works, but someone that knows better, can probably make more money.
IdRatherBeSkiing
Sherbet is NOT and NEVER WILL BE ice cream.
Never put all your eggs or stock in one basket. I don't think Facebook will get too much higher so might be good to take profits.
I wouldn't worry about capital gains too much. In Canada it is a lower tax rate than income. Think the same is true of USA. But you don't have a lot of income so you should get some deductions to cover it (again US tax law may be different).
I wouldn't worry about capital gains too much. In Canada it is a lower tax rate than income. Think the same is true of USA. But you don't have a lot of income so you should get some deductions to cover it (again US tax law may be different).
You're 100% right there however, since it is in a trust it gets taxed significantly more than it would if it were in my personal account. At least I think that's what my aunt was explaining to me last night.
IdRatherBeSkiing
Sherbet is NOT and NEVER WILL BE ice cream.
I don't know your aunt and uncle but my gut says you should just do what they say.
In college, I did some very small investing, mostly just to learn. Fortunately, the year I started my post-college career is the same year they started our company 401k fund. All of my stock investing for the past 36 years has been though the 401k.
I am much more active with my 401k than many of my coworkers. Some of them literally don't ever touch it. They have a mix of company stock, and fidelity managed funds, and they just let it do its thing. We contribute every month through payroll deduction, and that's matched by the company.
So, for example, there were a number of years when our company stock would go up, and then down, and repeat. Or the whole 401k would trend up, then down. Some people did nothing. Their net was zero. I always went with the big trends. I have my money spread over about a dozen funds. They range from stocks to bonds to equities to mutuals, large cap to small cap, domestic to international. After a run up to a high point, I'd transition to the low risk, low loss funds. After the market tanks, I go all in on the high return funds.
Diversification is good. I'm not sure what the future of Facebook stock is, but assuming it's at a high (or all-time high) like most stocks are, this would be a good time to diversify. It would be like taking the profits from Facebook, and using it to buy other investments. Of course, it's sort of like the housing market - when your house is at peak selling price, so is anything you'd move into.
So the trick is to go into stocks or funds that have growth potential now. I have friends who are making lots of money from Tesla, but I think it's late to get into that game. As for me, I'm in conservative mode (since the week before the election). When the market cools off, I will get more aggressive.
I am much more active with my 401k than many of my coworkers. Some of them literally don't ever touch it. They have a mix of company stock, and fidelity managed funds, and they just let it do its thing. We contribute every month through payroll deduction, and that's matched by the company.
So, for example, there were a number of years when our company stock would go up, and then down, and repeat. Or the whole 401k would trend up, then down. Some people did nothing. Their net was zero. I always went with the big trends. I have my money spread over about a dozen funds. They range from stocks to bonds to equities to mutuals, large cap to small cap, domestic to international. After a run up to a high point, I'd transition to the low risk, low loss funds. After the market tanks, I go all in on the high return funds.
Diversification is good. I'm not sure what the future of Facebook stock is, but assuming it's at a high (or all-time high) like most stocks are, this would be a good time to diversify. It would be like taking the profits from Facebook, and using it to buy other investments. Of course, it's sort of like the housing market - when your house is at peak selling price, so is anything you'd move into.
So the trick is to go into stocks or funds that have growth potential now. I have friends who are making lots of money from Tesla, but I think it's late to get into that game. As for me, I'm in conservative mode (since the week before the election). When the market cools off, I will get more aggressive.
I don't know your aunt and uncle but my gut says you should just do what they say.
Once again, you're right. Of course they have made some mistakes, but overall they have done quite well for themselves in the market.
Plus there is no one in the world I trust more than the two of them, they always have my best interest in mind.
While I do have a lot invested in Facebook, I am still diversified. This is the list of all my stocks and bonds (well, Nuveen is the only bond):
NEA Nuveen
IRM Iron Mountain
LEG Leggett & Platt
FB Facebook
GSK GlaxoSmithKline
PFE Pfizer
BAC Bank of America
T AT&T
LNT Alliant Energy
ODP Office Depot
KEY Keycorp
Of course I have SmithKline, that company was great to my father his entire, 50 year career.
That's exactly what my uncle was telling me.
This is my current portfolio
I'm in a bit of a conundrum, because the market has been growing while I've been transitioning to this conservative position. Assuming the economy picks up, and the market growth continues, I'm not in the ideal position to benefit. But I can always make adjustments.
I'm in a bit of a conundrum, because the market has been growing while I've been transitioning to this conservative position. Assuming the economy picks up, and the market growth continues, I'm not in the ideal position to benefit. But I can always make adjustments.
Seems like you are close to your aunt and uncle which is great. Would you hold a grudge if you took their advice and it did not work out with the FB stock?
Holiday dinners would never be the same.
Holiday dinners would never be the same.
Haha, nah. It would be disappointing but I know there is certainly an aspect of gambling to all this.
Technically, the way the trust is written, my aunt is legally allowed to do whatever she wants with it until I'm 40. If she wanted she could cash out everything and just give it all to herself, cutting me out completely. Hah. Or if I made a big enough stink, she would hand it over to me now but that would cause a family rift that I'm not looking to start. But she having complete control was kinda the point, I was there with my dad and the lawyer when we set it up and that's how we wanted it. The lawyer even mentioned that he didn't often get inheritors that were so willing to cede control like that. Like I said, they are the most trustworthy people in my life so I have zero qualms about any of it. Since I don't really know what I'm doing, I like that they manage it for me. I really appreciate that the two of them are helping me learn about the ins and outs of all this so I will at least not be completely clueless when I take over.
IdRatherBeSkiing
Sherbet is NOT and NEVER WILL BE ice cream.
The stock market is just a different version of a roulette table. Never put down what you can't afford to lose.
While I would agree that investing in a potential breakout stock should be treated that way, general stocks (like houses) have inherent value, so it's not the same as gambling. And given enough time, stocks (like houses) will always go up in value.
Provided you don't pick a company that goes belly-up or a Sears, Radio Shack, Takata, Sea World, and the sort.
Since all of my stuff is in my 401k, your statement is generally more true. Funds tend to behave more predictably than individual stocks.
Generally, if you don't mess with things too much, you can expect your money to double about every 12 years.
I started saving kind of late since I took longer to graduate than most people, so when I did, I told the financial guy I wanted to be pretty aggressive and was willing to take a decent amount of risk. His advice was to not try to outguess the market and let it take care of itself. Somebody had told me that when the market is down, don't look at your 401k statements till the markets are getting stronger again.
When I started my new job, the investment guy was trying to get a sense of my tolerance for risk. I told him that I literally hadn't opened my statements for a couple of years when the markets were down. He quit asking questions and said, got it, aggressive it is.
It's done pretty well through a couple of recessions, so I don't think I'll shift to a more conservative position till I get much closer to retirement.
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So after assessing just how heavily invested I am in Facebook I am leaning towards my uncle's point of view and thinking about selling half. About 36.8% of my entire portfolio is just Facebook right now. I didn't know I was that heavily into it. Hendrik went all in on that company. Having that much in 1 company is worrisome to me and when I brought it up to my aunt she agreed and mentioned that it was even more at one point but she convinced my dad to sell a chunk of shares.
I'm now looking into aristocrat stocks. I learned today that those are stocks that have annually increased their dividend payments for at least 25 years. They are generally considered safe bets.
I'm now looking into aristocrat stocks. I learned today that those are stocks that have annually increased their dividend payments for at least 25 years. They are generally considered safe bets.
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We've set Facebook to sell half my holdings at $265. Then we're going to buy 100 more shares of Leggett and Platt. There will be lots of money left over and I'm going to watch Archer Daniels Midland Co. for a bit and maybe get into them.
I'm happy we have a plan now.
I'm happy we have a plan now.
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