Thread: ILoveTDs Account Talk

Moved 100% S Fund COB

Might jump to F Fund tomorrow, based solely on seasonality. I'll let you all know 20 minutes before if I do.

Well seasonality was telling me to get out today an jump back in right before thanksgiving, to bad today had to be a panic sale I just couldn't bring myself to join in on. I'll just sit 100% S Fund till we get this 2% back and then reassess were we are.

Just thinking out loud, but I'd like your thoughts.

From a seasonality perspective 4th quarter seems to be a good quarter to be in the stock market overall ... e.g. the Santa rally. However, October seems to be one of the worst moths to be in the market ... e.g. black October. Additionally, a close analysis of November suggest the first 2 weeks of November tend to be down also (look were we are now).

Tom - maybe you can post those charts of the S&P over the last 60 years you have to support this.

So today I had a 4 hour drive from Mountain Home AFB to Hill AFB and was thinking, "What would cause the first half of the fourth quarter to be constantly down and the second half of the fourth quarter to be constantly up"? I pondered this for about an hour, then the accountant side of my brain started to wonder "Could this be tax related"? Then the auditor side of my brain started to wonder "What could be the root cause"? "What would be the benefit of selling your stock in October when the market is down when we know it will rebound and more in December"? I could be wrong, but I still think most of us believe in Santa and the money he is going to bring us next month.

Then I got to thinking ... "Half a quarter is 45 calendar days roughly, what tax code deals with Capital gains and 45 days"? Then it dawned on me, and maybe we have a IRS member on the board who deals with Schedule D and can confirm this, but I am pretty sure the IRS will not allow (if they catch it) any Capital Loss in which the individual repurchases the stock within 45 days of selling it, and instead just makes the individual adjust their basis down in the original shares they bought.

So here is my thought; "Could their be a whole bunch of Merrill Lynch Mother F***ers out their that sale off all their stocks they are upside down in triggering a "Black October" pattern and then laugh as mom and pop sale the bottom in late October (early November), and then buy back in right before the Santa rally as they are walking out the door for thanksgiving after the 45 day IRS requirement has pasted, getting more share of the stock they held in October and a nice write off on Schedule D"?

I could be reaching, but I do find it probably. What are your all thoughts?

it sounds plausible to me, but then again i like to watch fox news.

seriously now, if true the data should support that, i'd like to see those historical charts too. wouldn't the same pattern be evident in any quarter, just more pronounced in q4 before final tax tally? do independent traders have to make quarterly tax payments like small businesses? or do you think it's just an annual clear the books thing?

Originally Posted by ILoveTDs

Tom - maybe you can post those charts of the S&P over the last 60 years you have to support this.

Originally Posted by burrocrat

it sounds plausible to me, but then again i like to watch fox news.

seriously now, if true the data should support that, i'd like to see those historical charts too. wouldn't the same pattern be evident in any quarter, just more pronounced in q4 before final tax tally? do independent traders have to make quarterly tax payments like small businesses? or do you think it's just an annual clear the books thing?

fox news definitely has the hottest female anchors out of all news channels (at least in the US)

Originally Posted by burrocrat

wouldn't the same pattern be evident in any quarter, just more pronounced in q4 before final tax tally? do independent traders have to make quarterly tax payments like small businesses? or do you think it's just an annual clear the books thing?

I just check some of my old text books and it's called a "Wash Sale Loss" and is prohibited on Schedule D if repurchased within 30 days (not 45 as I thought).

I also just checked out your question burro. For an individual tax filer (which would include any "flow through" entity such as a sole proprietorship, partnership, LLC, or S Corp.) any tax payment received by the IRS within a calender year is consider received proportionately throughout the year. No penalty will be assessed if they meet one of two requirements: paid at least 90% of actual taxes for the year in the calender year, or paid 100% of the previous years tax bill. (e.g. if my taxes last year were 25K and this year are 30K I'd be penalized if I didn't at least pay 25K this year during the year, as 100% of last year is smaller then 90% of this year).

Any company collecting withholding tax from employees must remit that money within 30 days of end of quarter, or face penalty. I don't know about a C Corp and their estimated tax payments and penalties. However, they do file an 1120 annually just like we file a 1040 annually and were talking about a recognized loss not a gain, so I think whatever their situation it would be a clean the books end of year thing for them.

With all that said, I don't envision many companies owning stock in another company unless they are in the middle of a corporate takeover (such as purchasing a subsidiary). I believe most companies business model is to provide a product or service and expand, not purchase another company and filter their profits (unless they are attempting to own 100% of the company).

What I was thinking was more like Merrill Lynch telling BirtchTree; "Hey buddy, your not really planning on selling this stock anytime soon right"? "All our technical analysis (e.g. insider trading) have a target price on this stock 5% down from here in the next two months", "why don't you let me sell your stock (for 1% commission of course on your multimillion account) and buy back in once we hit the "technical analysis" (for another 1% commission of course)"? "By the way your currently upside down in this stock, so you're not only going to see a net 3% gain, but I'll be giving you a Capital Loss to offset gains you can carry forward for years". "What do you say Birch, we can do this or you can just keep holding your stock, you know we do it every year".

Again I might be reaching, but i'm trying to put myself in their mindset. What do you think burro?

Originally Posted by ILoveTDs

What do you think burro?

i think you may be on to something. but you better ask birchtree before you go selling his stocks, he likes to hold on to them.

I don't pay any commission for my first 30 trades per month. I will be selling one of my coal stocks (PCX) for a loss in December to offset other capital gains or I might just hold it until next year depending what the tax situation may look like. Otherwise I prefer not to sell my equities (wall flowers) because they produce income - my capital gains will take care of themselves over time. You are right though, tax loss carry forwards can be carried forward until used - the same applies to margin interest costs. I'm trying not to over react on the tax situation until results are known. The beauty of capital gains is that they don't need to be taken until the investor is ready - it's a good way to protect profits if you can assume market risk.

I think we are due for a down day int he S Fund and I still have two IFTs for November. Going to get out for a day or two, but plan to be back in riding into December.