Investing General Discussion
- Thread starter Furious
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I'm up to about a 15% cash position with my trades and profit taking the last couple of months. I'm good with that.
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Gravel
Mr. Poopybutthole
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This guy did what I was too lazy to do (overlay the two). But I talked about it a few times in here and Politics (or the Inflation thread).
The timeline is not quite the same anymore, as we would've hit our massive drop sometime back around August or September. But that's really minor. For about 8 months though we were almost identical to 2008. Include the failing GDP numbers in that as well. The only major difference was substituting inflation for the liquidity crisis, but the impact is also very similar.
I don't think there are really any periods that mirror so well as these two though. Generally things rhyme but aren't nearly so close.
The timeline is not quite the same anymore, as we would've hit our massive drop sometime back around August or September. But that's really minor. For about 8 months though we were almost identical to 2008. Include the failing GDP numbers in that as well. The only major difference was substituting inflation for the liquidity crisis, but the impact is also very similar.
I don't think there are really any periods that mirror so well as these two though. Generally things rhyme but aren't nearly so close.
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Gravel
Mr. Poopybutthole
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So since the market has decided to fuck with me, I think I've come up with a new plan for the year.
My estimate is that we need $50k for 2023 spending (and this is about what we input for our ACA coverage). I had originally planned on liquidating $50k from our taxable, figuring out what the delta in cost basis is (let's just say $25k LTCG for simplicity, I have no clue what it'll be), and then potentially doing a traditional to Roth conversion on the remainder (in this case, another $25k, once again as a delta in cost basis).
I sold $20k out of our taxable on Monday, 12/12. The one hiccup is that when I sold, Vanguard has an option that is just "minimal taxes," and I used that. So I have no clue what our cost basis was. However, when I sell the next block I'm going to go with selecting which lots of fund to sell, which should give me a rough idea of what the cost basis was on the first $20k.
So that still leaves us $30k short on our 2023 spend. I was going to say fuck it and just sell it all tomorrow since this market really is skidding downward in a hurry. But instead, I'm thinking of maybe only doing $10-15k from the taxable, which would get us through August or September. I'd then do a larger traditional to Roth conversion.
Then in 2023, hopefully with a recovery in swing by the end of summer, I can sell additional from the taxable to cover the remainder of 2023 and then 2024. It'll make our income higher, but I'll offset it by doing a smaller Roth conversion since I got it covered this year.
It'd sort of be playing catch up in the hopes that 2023 doesn't continue this shit show. It could be a pretty big gamble, but I've already been losing on this gamble all fucking year.
My estimate is that we need $50k for 2023 spending (and this is about what we input for our ACA coverage). I had originally planned on liquidating $50k from our taxable, figuring out what the delta in cost basis is (let's just say $25k LTCG for simplicity, I have no clue what it'll be), and then potentially doing a traditional to Roth conversion on the remainder (in this case, another $25k, once again as a delta in cost basis).
I sold $20k out of our taxable on Monday, 12/12. The one hiccup is that when I sold, Vanguard has an option that is just "minimal taxes," and I used that. So I have no clue what our cost basis was. However, when I sell the next block I'm going to go with selecting which lots of fund to sell, which should give me a rough idea of what the cost basis was on the first $20k.
So that still leaves us $30k short on our 2023 spend. I was going to say fuck it and just sell it all tomorrow since this market really is skidding downward in a hurry. But instead, I'm thinking of maybe only doing $10-15k from the taxable, which would get us through August or September. I'd then do a larger traditional to Roth conversion.
Then in 2023, hopefully with a recovery in swing by the end of summer, I can sell additional from the taxable to cover the remainder of 2023 and then 2024. It'll make our income higher, but I'll offset it by doing a smaller Roth conversion since I got it covered this year.
It'd sort of be playing catch up in the hopes that 2023 doesn't continue this shit show. It could be a pretty big gamble, but I've already been losing on this gamble all fucking year.
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Harvest time. Stocks/ETF in my mom's brokerage account. I have some pretty chunky gains I am looking to offset somewhat. The ones in yellow are red and Candidates for loss harvesting. Most I am not considering selling (GOOGL, NVDA, META). I already loss harvested PYPL. DIS has "potential" to turn things around at some point as does BA and CRM. Thoughts.
Moglyzoke Moogleman
Stock Pals VP of Shit Stocks
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Gravel
Mr. Poopybutthole
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Wow, my realized gains are super low. I guess because the taxable account wasn't even opened until 2018. I did another $15k today, and I'm going to guess my total is around $3-3.5k in gains.
So now I'm in a situation where I'm going to need to do a massive Roth conversion to "manufacture" income (which isn't a bad thing, since I can do it "cheap" this year, and convert even more) so we're not below 100% of the FPL ($18k?). Whole thing is rather confusing, to be honest. I'm sure once I do our taxes for 2022 it'll be a lot easier to understand the relationship these all have. But this being the first year to do it, and that the market is just so fucking terrible this year really makes it a shit show for me.
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This is my obligatory PSA that if you are doing conversions and other not-exactly-simple tax impacting events, paying a CPA $500 - $750 may not be the worst idea.
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Gravel
Mr. Poopybutthole
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The conversion itself isn't complicated. At least, not my understanding of it.
The complicated portion is controlling our income. For ACA, you basically have to give them an estimate of your income by mid-December, and from that they give you a subsidy to your premiums for the upcoming year (if I overshoot it, I'll owe a massive bill on next year's taxes). So I'm trying my best to get as close to that number as possible, which is made complicated by the fact that our only income will be qualified dividends (LTCG). And that means controlling for cost basis on the accounts we sell (taxable for our 2023 income, traditional IRA for the conversion). Theoretically, we can have like $109k in income without paying taxes. Which is great. However, the ACA part fucks that up.
I hate to make it sound like I'm doing everything for a government gimmie-dat, but well, I'm absolutely doing it (after getting fucked on taxes for years, I'm getting mine). Medical expenses are our #2 largest after the mortgage, and so the subsidy is a massive amount of money; so much so that there may come a time where I'd rather take the 10% IRA early withdrawal penalty just to keep the ACA subsidy for lower income.
The problem is I've never done it before. So while I'm reasonably confident I understand what I'm doing, I've never done it in a real world scenario. So I'm kind of flying by the seat of my pants. And with only a week and a half before the end of the year, I don't have time to fuck around (also made more complicated that my father-in-law died yesterday so the wife and I have been out of state a bunch).
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I get it. I havent offered any advice because it isnt in my wheelhouse. Depending on who you call, a good CPA will give you a free discussion about the subject. Depending on the price he offers to do the work, you might decide its low cost insurance to not fuck it up and incur a tax liability. Or not. The free discussion is generally hard to beat in price.
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Circling back on the Buy/Write Covered Calls, we have a good example of what I was mentioning about the downside risk. Price drop.
So recall our example had buying T at $18.50. T then tanks with the market last couple of days. Since your cost basis is $18.50 you dont want to be selling calls at a strike below your cost. But now the strikes at and above your cost basis aren't really paying dick for premium. This is because the markets dont see T as a big price mover. Writing the $19 strike pays 7 cents with the stock at $18.
The main driver for this is something a little more technical, and its called implied volatility (IV30 in yellow). Think of the IV as a multiplier on the premium that gets paid for options. An IV30 of 20.31 has basically no impact on the premium. If that same IV was 120.31 those options would be paying a ton. But this stock has a century of history and markets know it is the exact opposite of "volatile". So these old value stocks dont have lots of price movement and no implied volatility so once the current price drops and you are in the red you might end up having to skip a month or two selling options until the price recovers closer to you cost basis.
So recall our example had buying T at $18.50. T then tanks with the market last couple of days. Since your cost basis is $18.50 you dont want to be selling calls at a strike below your cost. But now the strikes at and above your cost basis aren't really paying dick for premium. This is because the markets dont see T as a big price mover. Writing the $19 strike pays 7 cents with the stock at $18.
The main driver for this is something a little more technical, and its called implied volatility (IV30 in yellow). Think of the IV as a multiplier on the premium that gets paid for options. An IV30 of 20.31 has basically no impact on the premium. If that same IV was 120.31 those options would be paying a ton. But this stock has a century of history and markets know it is the exact opposite of "volatile". So these old value stocks dont have lots of price movement and no implied volatility so once the current price drops and you are in the red you might end up having to skip a month or two selling options until the price recovers closer to you cost basis.
