I think this down turn will be short lived since heads are getting chopped and Porsche will take the leads for some time. It will drop further as soon as the news comes out on how many vehicles were affected and who was involved. Just this morning they reported that cars overseas had "issues" too.

Good buying long term opportunity sure. Typical over reaction, reaction then recovery cycle with a scandal. For me im a chicken chit investor, I avoid the auto industry because there are so many outside influences that can "modify" the prices.

Autos and houses are "CYCLICALS" == they're boom and bust... I've always avoided both of these. The unions strike -- the sales lead changes depending on who has what car (take the Mustang outselling the Camaro with the latest model)... Like Vince -- I see this as a major misstep as far as management goes -- but that should be shaken to the core... and a company like this should be able to recover. Many Mia culpas... will be offered -- fines paid -- lawsuits settled... and two years from now you'll have forgotten all about this little fiasco (hopefully).

Two years might be optimistic, but then I haven't really done any research on this, although I am a tech in the industry. What VW is going to have to do at a minimum is put out a software flash for the computers in all of these cars, which requires a test by CARB to be certified. That takes time, and think there will be any scrutiny over the new software???

It can also be expensive I understand to get approved. Installing it into the car is relatively simple and since it only affects it during emissions testing, other components that sometimes also have to be replaced during a re-flash, probably wont have to be.

Just heard today that regulators in EU are looking into it there, where there are a many more diesel cars than here and just ask Google and Microsoft about European regulators.

With a 4+% dividend right now there is already some "yield protection" protecting it from probably much bigger drops as it's getting to the point where the yield is so attractive that the price can't go much lower (providing they keep paying the dividend). Who knows, but I'll be watching closely, good one to go to school on, that's for sure.

This is what I think is good for Investing 102 --- Watching how these things play out - and how you think about them.

GM (GM) had the "ignition switch" debacle... Toyota (TM) had the "runaway throttle"...

GM is DOWN 13.9% on their 5 year chart (yet they pay 4.88% dividend) and TM is UP 63% for the same period (they pay 2.75%).... WOW!! I'd have never thought there was that much spread.

I've owned a modern GM and Toyota. I can tell you exactly why... :lol:

comparing a Prius to a Caviler is hardly fair Todd. :lol: :snapout:

Oh...... that was a direct hit! LOL

Toyota paid out $200+ Million to settle it's issue, and there was never really a proven documented case of unintended acceleration. An even bigger problem is the 85 lawyers who filed the class action lawsuit got $227 million. The plaintiffs who those lawyers filed the suit for? Yep, they collectively got $395,270. Couple years and it was all over with.

GM tried to cover up their issue for more than 10 years and during that time marketed their cars as "safe". It's costing them at least $900M.

And, I still hate Prius-es!

FWIW: A market perspective client letter from a fund manager I deal with:

As you are aware the past three months have been very difficult for stocks. Given the current environment, we thought it would be helpful for us to share some of our thoughts on these recent market developments.

In early to mid-August, we were reminded that stock market corrections can occur quickly. Global markets retraced most or all of the year-to-date gains and volatility increased significantly. Then September came and although many of the underlying market currents didn’t change, the headline indices regained some of that lost ground. A small group of large stocks (Amazon, Google, Netflix, Facebook, and Chipotle Mexican Grill, to name a few) which have outsized effects on the indices, drove a significant portion of the recovery. Unfortunately, in order to match or exceed this type of index performance, an investor would have to make a few, highly concentrated bets. Our preference remains on running well-diversified portfolios, which are not rewarded in these types of environments.

Many studies on the historical and current divergence between growth and value oriented investing arrive at a similar end point: value-based investing has historically produced superior returns. But we are currently in a period in which markets have flocked toward growth. As the accompanying graphic shows, the year-to-date performance (through Sept. 24, 2015) of several Russell® indices reinforces the current situation. Consistently, across market capitalizations, the growth category returns are essentially flat while the general (core) returns are negative and the value category returns are more negative, still.

Not surprisingly, uncertainty remains the only certainty at this time. Market participants continue to weigh the potential effects of an eventual decision by the Federal Reserve to raise the benchmark interest rate, the collapse of commodity prices, global economic health and market valuations. Third quarter earnings, a key component of the past six year bull market, are expected to be less robust than last year. Currently, it appears that this is a temporary issue, but is one that warrants close attention. Ultimately, we expect these higher levels of market volatility to remain in the near to intermediate term. Importantly, it is in this market environment in which stock picking is rewarded.

Believers in mean reversion, like us, expect the environment to eventually return to normal. More important is that we maintain our value discipline. We have been through these type of markets before. In the short term, they are painful, but in the long term our clients have been well served by staying the course.

You'll learn a lot more about yourself - and investing in general when the markets are poop -- than you ever will when the market just goes up every day.

You'll learn about time. Remember that money you were saving and "didn't need" for awhile (2 or 3 years perhaps).... You'll learn about diversity, and how one or two names in your portfolio are the only thing keeping you somewhat afloat... You'll come to understand why earning some money on your money is really important when the growth of the share price IS NOT there... You'll find you look at your portfolio a lot less in bad markets... this is especially true if you own great names... You'll come to understand all my "gambling" statements if that's what you've done...

And when it snaps (or crawls) back... you'll think how lucky (smart) you were to have been acquiring more shares all along the twisty, winding, route the market takes.

One of your best yet! :thumbsup:

Crazy damn market... I have no words other than just to stick with it. NASDAQ UP over 100 points! WTF.... Crazy.

Here's the only thing I can say - do what I do - pick your names (the best ones!) don't get squirrelly... just buy when you are ready. Close your eyes and ride the wave.

Worst quarter in 4 years. Now you know what a ****ty market is like. Sometimes it's like this for a few years!! Stomach it - weather it - don't try to time it - just keep on investing. It ALWAYS gets better. The losers are the ones that bail.

It will be interesting to see how the market reacts to the Putin :bitchslap: tomorrow.

What about what Carl Icahn said today? I think it's a bit extreme but he's no dummy either.

That's good. I'm tired of seeing red every day. Then a big green day and then small red numbers for a week or 2.

Erik --- I totally agree with you that Icahn is... well... an icon. I listen to him - and I pay attention. But here's where I usually go... "the market" is just so much bigger than "anyone" including the federal government. Typically the market reacts as a "group think" mechanism. Nobody is buying - everyone is buying...

What we're dealing with is group think - on China - on the rest of the world... nobody really knows what these economies are going to affect here or on US companies. We are dealing with a FED rate hike, or not. We don't know the affect of what that is going to do. We have a collapse in the oil industry... just when the US was looking to become a major oil producer and possibly even an exporter. Where's that going to shake out.

Here's the deal in the market. Lower oil prices -- bad for some - great for many... are you in the right ones? If you're in to oil - you're getting killed (I am ) - if you're into autos - you might be looking like a hero (more sales - more big profitable truck sales etc). Retail sales should look good in the fourth quarter because the consumer has more money in their pocket from the lower prices...

If you're invested into anything that is "international".... Caterpillar... etc... you're DOA... But would you really be afraid to be invested or buying more (CAT)?? This is one of the worlds premier companies. When Europe and China come back on line - you'll look like a hero owing CAT long term.

My point - same point I've always made -- buy the very best the world has to offer - get a decent dividend - buy more as you can when the world appears to be going dark. That is how you make money. Long term is not one quarter... it's time to build your portfolio not shrink it. Grow a set. You'll be happy with the result.

What is your take on Snap On. They go up and down in big moves almost daily. But man it got more hammered lately then I would have thought. Are they more international then maybe I thought?

They ran up pretty far - pretty fast - and their dividend is small - so you're relying on all share price growth. In a down market - or jittery market - people pull money out of where they have big gains FIRST... everyone is loathe to sell losers.

Great company - great name... the share price might have run a little too far is my guess.

I've been using the tools for 20+ years, just bought my first shares 10/20/2014 and as of today I'm still up 21%. They have the best tools, are in a lot more businesses than most are probably aware of and look at a 2 year or longer chart. They have these little blips and then keep on chugging along. Go to their website and listen to a recent conference call and you'll get a sense of the whole company. More than just tools to mechanics. This one stock showed me that once I'm aware that a company clearly without a doubt produces the best product, I should be a buyer. I will also know right away if the product starts to suck and can get out because I use them every day.

Erik -- This is exactly what I've always said about buying companies that you know and understand. As a consumer - you'll be the first to see signs of cracks in the business. If you suddenly find yourself not happy with the way things are going - you'd have to assume that "others" would feel the same way... and you can start sliding out of the shares.

Obviously this is an over simplification of investing - and it's impossible to do this with every single name you'll want to own. But if you break it down for making CHOICES of which companies to invest in - and you're seeking names to put in your portfolio... then this is one more tool (pun) in your bag to help you. It's as easy as adding a financial name -- if you bank at Wells Fargo and like them - and the choice is between them and Bank of America... you'll sleep better owning WFC. Same with an oil company (that also retails gas)... or a food stock... or a retailer such as Macy's or Nordstrom. Are you a Home Depot guy or a Lowe's guy...

It's not the end all way to invest - but it is a good way to help people (newbs in particular) to get them started -- and to have them STAY IN THE GAME when the game isn't particularly fun (like now).

How's that working out for you?? :hello:


Capstone Turbine Corp. (CPST) Drops 25.53% on October 01

Low blow....ha

It takes a LOT to keep even on low blows with Charlie!


Really wasn't trying to rub his face in it as much as I was pointing out "statements" like this are always tough to defend. This is INVESTING 102... and it's a good learning point for many here.

I think there are MANY stocks in the S&P that are considered to be in true "bear territory" which is down 20%... so this is not the only stock that sucks... the whole market is stinky right now.

So when you think the "pros" do such a much better job than you ever could "investing".... think again. LOL

Read this article on the "hot" hedge funds... The first couple paragraphs will give you all the info you'll need. : > )



http://www.bloomberg.com/news/articl...al-2008-losses

Anyone have any opinions or even a formula for taking gains or taking losses for tax purposes?

Here is my situation... I have one stock and one municipal both traded in a post tax "Play" account... I am going to share the tickers because it will help ..

I have MUI which is a tax free Muni that can take a loss on.. and trade up for MUS.. I am down 38% on it..
I have COKE that I am up 198% on right now.. which I think is a good time to sell off some of it..

Is there a way to calculate how much of each would offset? Assume Coke is not subject to short term gains?

In a nutshell, is there any offset losses and gains strategies to help come april 15th?

Back on track
 

FINALLY I have caught up with this thread again after slacking off. After watching the market take some serious hits I realized I needed to get back on board with what I have going on and put some idle (LAZY) workers back to work.

I have about $3800 in my retirement account and have been considering purchasing ATT (T) with that or adding to my two red positions. CAT is -12.80% and KMI is -28.34%. The rest of the account is doing pretty good.

Do you think it would be wise to spend it all on ATT, add to the 2 in the red or divide it between the three of them? I've included a screenshot of my holdings for your critique.

Jose I am not qualified to answer your question... But congrats on them gains !

This is easy -- because tax harvesting is not complicated. If you want to be tax NEUTRAL - then sometime before December 31st -- you sell the loser (however much you want to sell).... and then you sell enough of the winner to zero that loss out. Or vice versa. Sell however much of the gainer to equal the amount of the loss you want to take. So if you have a loss sale of $1,000 (capital loss) - then sell something with a gain - where your capital gain is $1,000. Net tax neutral transaction.

Losses are capped at $3000.00 per year -- so if you just sold the loser --- and had a $9,000 loss - you'd have to carry the loss over a three year period...

For losses - there is no distinction between short and long term. That distinction comes if you have GAINS. So you can sell a short term loser and offset that loss with a long term or short term gainer if you want a tax neutral harvest.

But remember that you can't write off more than a $3,000 loss per year. So you can't earn $100,000 and sell a bunch of losers where you lost $50,000 - and think you're going to offset your income by $50,000. You'd only be able to write off $3,000 this year. This is why people that want to take some gains - but not incur the taxes - usually offset the gains with selling some losers. Then use the cash to re-deploy into other investments.

Your brokerage account should show you your "paper" gains and losses per position. And from there it should be pretty easy to do the math to calculate what you need to sell to make this all work out.

Always hardest to put money into the bleeders... but that's what you do if you still think the company is solid - that the dividend is solid - and if you believe the share price is down for some reason other than the company is going to hell. Remember that if you simply bought the same amount of shares that you have - it's only going to cut your loss a little. That would be called "doubling down".

In your case - let's take KMI:

You have 31 shares @ $41.35 per share cost basis. So if you bought 31 more shares at todays price of $29.63 --- your new cost basis would be 62 shares @ $35.49 per share. That is closer to where it's trading - but not really close enough for "me"... If it was me I'd want to get my share price down to maybe $32 ish. That way it has less to recover before I'm made whole - or I take a loss and turn it into a gain. So I might buy 100 shares of it. Your position would then be 131 shares @ $32.47

That is painful to do - takes this position to "out of whack" with the 5% rule -- but rules are made to be broken IF you think of this as a TEMPORARY position that is a bit of a gamble = in a effort to get you back to even.

KMI moved down with oil - yet it's their pipes that move oil... regardless of the price of oil - a person that owns the crude has to move it to sell it - that uses KMI's pipes... the consumption of oil is not the problem - the oversupply of it is. Regardless - if you have too much supply - you might have to store that - and that means you have to move it to a storage facility etc.

If oil comes back just a little... KMI will move with it. In the meantime you're collecting 6.6% dividend... which is just huge. And you have more upside potential here than you do down - unless oil goes to $35 or $20... which is something we just don't know. Oil seems to be floating right around the $40 level here for some time... and the oil rig count is on the decline - which helps with the oversupply... and blah blah blah.

So it would cost you $2900 of your $3800 available. I'd hold the remaining grand and build back some more cash. Cash is always nice - and the more volatile the market the more comfort you'll get from holding some cash. If you really want to do some math - you'd take the 6.6% dividend you're making on the new KMI purchase - and spread that over the $3800 (if you want to look at it that way) and you'd be making about 5% on that - which is a good return! Even though a grand is sitting idle.

Mind you -- this strategy doesn't always work!! Share prices can fall further - giving you an even larger loss (because you'd be holding even more shares!) - but when this strategy works -- it works really really well!

As soon as the share price approached or exceeded the new cost basis.... I'd sell the original 31 shares (you can do this - as you can identify which shares should be sold) leaving you with the 100 shares at your $29 purchase price... and then your gains can start from that new lower cost basis. I'd then use that money plus any new cash and the remaining cash you had and figure out what to do with that... when you're ready.

Ask more detail if you don't understand the strategy. If you're nervous about this strategy - then let's discuss a different move.

I'm focusing on KMI rather than CAT because the CAT isn't that much of a loss - and it can recover that distance pretty quickly on it's own... if we see China and Europe recover a bit... I wouldn't chase that here. The KMI has the big reward component if oil recovers just a bit - and the dividend on it is fantastic down here!

Thank you for the insight Greg. I didn't think to look at it from that perspective because the bleeders don't scare me into making any irrational decisions (buying high selling low). I'm in this for the long haul and given my time line I believe KMI & CAT will/should recover. One reason why I was considering buying ATT to add to my positions.

Just to make sure I'm understanding what your explaining to me. Buying shares at a lower cost per share will bring my average cost per share down which should help speed up my recovery IF the stock price rises and does not decline further because now the gap has become smaller between my losses and breaking even. Selling the long-term shares of KMI will eliminate the higher cost per share keeping the new shares at the lower cost basis allowing my gains to become more substantial IF the share price rises by not having to make up as much ground to recover.

I think I just repeated what you said but I need to make sure I'm understanding it.

Jose congrats on the nice portfolio! I'd personally split the money simply because I don't like putting all my eggs in one basket. I'd definitely go KMI but I'd also put T and CAT in there, too. I'd simply expect a lower return on that money that I put into those two. I think I would invest the majority of the $3800 in KMI and not split it into 3rds. Say 50/25/25 KMI/T/CAT. Tough choices sometimes. I wouldn't sweat it too much whatever you decide so long as you put that money to work.

EDIT: I went back and looked at your screen shot again. I don't think I would buy T now since you don't already own it. I own both T and VZ and if I was starting over, I think I would buy VZ first. Personally, I'm considering adding to my T portion simply because it's down from where I bought it and I'm heavier on VZ so I want to balance my T out now. I'd maybe also look to add to some of your other current holdings. I put money into GIS and HAS right before they jumped a couple months back. They were already doing well, and I just wanted to add to my position as I normally do. I got lucky they jumped the way they did. Point being, in another week, your current price on a particularly stock may look like or be a bargain. Do note that I routinely add money to my account every pay check and typically make purchases once a month. I don't want to stress over my purchases so I simply add to a position as I go through the year without trying to time anything.

Yes --- you're following perfectly.


This is only one opinion... and you need to follow what YOU want to do. Not what I suggest. I'm just tossing this out here because it's a good subject for Investing 102. Just ways to think about stocks... and we've not been in a period where people are experiencing losses. The market has mostly gone UP since we started this whole thing. So I actually like this new "issue"... and it is a good subject. What to do when things aren't going your way.

Trey -- Good points -- and you show a healthy understanding of investing. The focus shouldn't ever be "today" --- or next month. Investing is best done with discipline. Steady, routine... up market or down market. Just keep plugging away.

The harder part comes when people are looking at red... So I think these questions are fantastic. They're gut wrenching. Do you throw more money after bad - is it really bad or is it a longer term opportunity - what's the thought process behind putting more money into losers... etc.

The part I like the best about dividend reinvestment is that it automatically buys shares every quarter - come hell or high water... and over time this automatically helps because more shares are bought when prices are lower and fewer when the prices are higher.

The KEY to all of this is to look at your accounts/positions and be comfortable owing what you do. Then it's easier to roll with the punches.

Ok so here is where the mental part of investing comes into play and tricked me.

I was thinking of adding a new position but also wondered if I should add to KMI & CAT because they were in the red. With the gains I've incurred already I didn't think it was feasible to add 5, 10, or 15 shares here and there to positions already held. Spending that amount on one stock would get me more shares (almost 100+ in T), giving me a higher dividend amount, and eventually getting me more shares at a faster rate. Mentally tricking me into believing I got a better value with my purchase just because I would be looking at a bigger number of shares.

Although KMI & CAT are in the red, I know this is a long-term investment with plenty of time to recover (I hope). Thinking about adding 100+ shares of T kept me from looking at the big picture and considering other options.

Thank you to Greg and Trey, not for suggesting what I should do but for giving me another perspective on how to invest and think about investing.

Kmi
 

In full disclosure --- I recently added 5000 shares of KMI and now hold 25,000 shares. This position is underwater for me as well - but pays a great dividend - is a company that has a proven track record of raising the dividend payout. I will - if the price stays low - add more to my holdings. I always scale in or out of a position - meaning - I tip toe.

The mental part has always been my struggle, Jose. I overthink things too often. I finally got to the point a while ago that I decided to not overthink my purchases and just do it almost mechanically every month. I pay attention to why I own a company more than its current share price.

That's a winning strategy!

The investing game - regardless of what you choose to invest in - is mostly all mental. Those that bought houses when nobody wanted them - have made a killing now. Those that buy the market when it looks terrible... make the biggest gains. It's the exact opposite of buy high and sell low. Most people only invest in something when it's all sunny and roses. Then they panic and sell when it drops. Those people NEVER win.

Overthinking is also my problem. After not paying attention to this thread for over a year I read it to the end and am now motivated again. I also bought 100 shares of KMI today bringing my Total Gain/Loss down to -6.11% from -28.34%.

Okay -- now -- remember that is 6% of a much larger number.... but now you need to be on your game and when you feel it's time - bail on the old shares.

Remember - and this goes for everyone... You have to look at your money as a total pot --- some winners -- some losers -- variable all the time - up and down... but you have to look at the pot as a whole! If you're UP overall == and that percentage is good - then that allows you to gain some confidence -- and the longer you're invested -- the bigger that pot grows... so much so that eventually you're almost immune to down markets. Hope that makes sense.

Note that the close of KMI today was it at $31.79


Now you see how this can SOMETIMES work out.