Making Lemonade out of Stockmarket Lemons

red-beard · red-beard's Garage

I was thinking last night that maybe now is time to shuffle the portfolio. Think about it. Capital Gains tax is low AND the gains will be small, or maybe offset with some losses. This would mean that re-shuffling right now your taxable stocks would be cheap. And you can move into somethings that are going to do better, or as I'm thinking, that pay dividends. The Dividend yields are very high right now, based on the stock prices.

Thoughts?

red-beard · red-beard's Garage

This might also explain why, there is a lot of churning going on. Fund managers are making last minute changes while the capital gains rates are low and while they have minimal exposure.

competentone · 10-11-2008, 08:42 AM

Quote:

Originally Posted by red-beard

I was thinking last night that maybe now is time to shuffle the portfolio. Think about it. Capital Gains tax is low AND the gains will be small, or maybe offset with some losses. This would mean that re-shuffling right now your taxable stocks would be cheap. And you can move into somethings that are going to do better, or as I'm thinking, that pay dividends. The Dividend yields are very high right now, based on the stock prices.

Thoughts?

If the economy tanks, the companies won't be able to keep paying the dividends they are paying now.

This is what the market is expecting -- you saw similar "excellent" dividend yields in the financials last year and earlier this year. If you bought the financial stocks though, you'd be pretty much wiped out now.

There is no "free lunch" in investing. High yields means there is high risk. (There can also be high risk with low yields, so don't assume that because the yield is low, it's "safe.")

Additionally, if we get Obama as President, expect the tax rate on dividends to skyrocket.

Mr.Puff · 10-11-2008, 10:32 AM

Think about this, if Obama is president then he will give $4 billion in tax credits to domestic car companies. Right now GM is trading for $4...

svandamme · svandamme's Garage

GM will still produce crap cars, they'll blow those tax credits faster then a meth head will blow money stolen in a burglary

besides, 4 billion tax credits, when they are running a 4.3 billion gross loss a year... is still a negative result

RWebb · RWebb's Garage

well, I shuffled mine Friday - to emphasize low priced stocks & health care; less foreign exposure [for now]

just let my indiv. tech stocks ride