Bought Wfc @ $19.84.should I Keep Or Sell?
Q: I really thought wfc was going to do well from here on out because of their strong earnings. Was this a bad idea?
A: Ya their right man ... LT WFC is money in the bank! hahaha But depends on what trading style you have ... are you a regular trader making cash on the fluctuations? Or are you trying to position yourself for the LT? ST style, take your profits even if small b/c more than likely it will go back down .. LT (depending on your equity) just avg. down. I'm LONG WFC, I think they will be coming out on top after this whole mess. If you're long term and have the capital then drops are an opportunity to lower your pps by buying more. If you're short term, well, set a stop and better luck next time! You bought a $44 stock for $19.84. . . .hmmmm??? I would hold and wait for those $1.40 dividends on $4 EPS that will be paid at max 15% LT Cap gain tax. Or you can sell at @19.89 and make a nickel. If you do that right 20 million times a year you will be rich. Of course, the IRS will have you breaking rocks for what you owe them. LT cap gains, that is, profits on stock gains sold over 1 year and a day from when you bought them, are taxed at 15% MAX no matter how much you made. Remember the Bush "Tax cuts for the rich"? These are them. If you profit 1 day before the year time frame you count that profit as ST cap gain (aka "income") at whatever rate you are currently paying, 25%-28% whatever. That is a sliding scale that grows as gains grow. You will see it really adds up, especially in February when you get the dreaded forms in the mail. If you hold for LT cap gains, any money you did not have to pay the IRS continues to earn dividends and compound. This is the eight wonder of the world. What I did to take advantage of these times, and few will agree, is I doubled up, that is borrowed max on margin when the stocks were in the toilet and kept doubling up during the rise as the account readjusted. Even though I am paying interest on the Margin account, the dividends the companies are paying nearly zero's out the interest. I will hold this position until next year (and a day) then possibly pay off the margin account with some LT cap gains, though unlikely. This is why my outlook is at least over 1 year. For every $100 I invest in a stock that will double, like WFC in 1 year, I will net a 300% profit and only pay 15% LT cap gains IF I SELL. The likely scenario is that I will not sell any shares and pay the margin balance off from other investments that could not yield me what the stock could do, Ie: house proceeds, income, etc.
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