Billionaires dumping stocks

[Big_D]

I ran across this article. Makes me nervous!

http://www.moneynews.com/Outbrain/billionaires-dump-economist-stock/2012/08/29/id/450265?PROMO_CODE=FE8A-1

I think I will be selling my stocks also. I eeked out a 9% gain YTD so I am happy to sit out for a while and see how it goes throughout the election.

 

[TURBO2GO]

I thought I was reading an infomercial to be honest. The article is full of holes. To me, it is completely meaningless.

 

[docjohn]

looks to be 2 sectors and they don't say what those investors put the liquidity back into.I am like you getting skiddish as I am on an aggressive plan...

 

[RobD]

I thought I was reading an infomercial to be honest. The article is full of holes. To me, it is completely meaningless.

T2Go is right on the money....it is an infomercial....they are looking for you to subscribe to Aftershock...it's a book and then subscribe to a monthly newsletter.

While I believe you should look to rebalance(shave down some of the profits) at the end of this quarter. I wouldnt give up on the markets at least until the election. The fed's comments about easing made it clear that they will not watch the market unravel before the election.

If Obama wins....I would then pull back on stocks because the GOP will not let anything get done in the near future....and off the fiscal cliff we will go and it could get ugly....if Romney wins...we can still have some market down side but not as siginficant...we'll have to wait for him to get into office so he can then be the "savior" to the economy and reinstitute some of the Bush era tax cuts etc....

PS-John Paulson is probably selling stocks to meet liquidations....while his call in 07/08 on mortgages was right on the money. His call on bank recovery and stock piling gold for the past year not so much....his funds are BLEEDING assets.

 

[docjohn]

I took a chance with citi before the reverse split....and you can see where that got me Its funny but when the markets are near all time highs my confidence goes down

 

[jond]

Problem is where are you going to put your money?
There's only a few decent buckets, and when the entire world prints("borrows"), all ships rise. The only ship to fall is cash.

 

[V.Lats97nsx]

Fiscal cliff is going to happen if bush era tax cuts expire. The rich won't get hurt if we go off the cliff, they will invest in other meens instead of the economy. They will see it insane investing in the economy and jobs unless they can get some sort of entitlement like solyndra recieved or ge, we are seeing the coal business going bankrupt. Couple days ago the amount of billionaires world wide went up close to 9500. In recessions the rich get richer and the poor get poorer. How do I know all this? I play a billionaire in my dreams lol.

 

[rotorray]

Because of the upcoming tax increase on capital gains some feel it's better to sell now and pay 15% than after 1 Jan and pay 24%. PLUS, you can sell now, pay the 15% and then buy it back. Substantial savings if you're a billionaire, I guess. FWIW.....

 

[TURBO2GO]

Because of the upcoming tax increase on capital gains some feel it's better to sell now and pay 15% than after 1 Jan and pay 24%. PLUS, you can sell now, pay the 15% and then buy it back. Substantial savings if you're a billionaire, I guess. FWIW.....

That's a good point...

 

[Joker]

They also mentioned T-bonds will lose half of the value, if 10% inflation---> interest rates go up----> housing values will collapse.

On the contrary, today news indicates the housing market is turning around. So are they full of it?

 

[TURBO2GO]

. So are they full of it?

It's an infomercial!

 

[NSX167]

It's an infomercial!

+1, selling the book? I saw this link 2 weeks ago.

http://www.smarterlifestyles.com/20...ns-agree-raise-taxes-151415997--election.html

 

[BATMANs]

buy silver in Belize

 

[sahtt]

I took a chance with citi before the reverse split....and you can see where that got me Its funny but when the markets are near all time highs my confidence goes down

That's exactly how it should be doc. Be scared when the market is high and buy like a rabid animal when it's low. Human nature makes this a winning strategy 99 out of 100 times. Always keep the tech crash in mind, it's a fantastic modern example of bubbles and their subsequent pop. NASDAQ is stilll off highs.

 

[Big_D]

I realize that the article is full of holes and yes they are wanting you to subscribe to the market collapse mentality but it got me thinking maybe its a good time to sit out for a while.

I wasn't aware of the capital gains tax increase so thats also something to factor in.

I got burned in the dot com bust and again in 2008 so this time I will error to the conservative side. I have a 15 year investment horizon for retirement so I can't just hope that I am safe.

 

[itrsteve]

Because of the upcoming tax increase on capital gains some feel it's better to sell now and pay 15% than after 1 Jan and pay 24%. PLUS, you can sell now, pay the 15% and then buy it back. Substantial savings if you're a billionaire, I guess. FWIW.....

Is it going to be 24% on long-term capital gains as well? If so, god dammit.

 

[blue_myriddn]

Is it going to be 24% on long-term capital gains as well? If so, god dammit.

Don't understand why capital gains doesn't have a progressive tax rate rather than a flat tax.

 

[itrsteve]

Don't understand why capital gains doesn't have a progressive tax rate rather than a flat tax.

I'm not an accountant but short term capital gains would vary from 10%-35% based on your normal tax bracket.. and long term would vary from 0-15%

Glad they're destroying the incentive to invest, this should help grow the economy a bit.

 

[sahtt]

I'm not an accountant but short term capital gains would vary from 10%-35% based on your normal tax bracket.. and long term would vary from 0-15%

Glad they're destroying the incentive to invest, this should help grow the economy a bit.

Come one itrsteve these massive amounts of 'unearned' income are what is destroying this nation!

It's not like they already paid income tax on the money, managed to save some instead of seeking instant gratification, put it into risk assets that help fuel business and economic growth, and then have to pay taxes on the gains if they manage to make any!

I think they should erase coporate profits and all 'unearned' income too! That'll show em. In all seriousness, taxing capital gains significantly is a lose lose situation for our society.

 

[Vega$ NSX]

In all seriousness, taxing capital gains significantly is a lose lose situation for our society.

I agree 100%

 

[TURBO2GO]

Special capital gains rates are exactly how the wealthiest of the wealthy manage to pay the lowest percentage of taxes. Because their income is mostly from capital gains. So the guy that works a job at shop pays 35% and a billionaire pays 15%. All that is being done now is some of this is coming in line with everyone else that actually earns money working

 

[docjohn]

Special capital gains rates are exactly how the wealthiest of the wealthy manage to pay the lowest percentage of taxes. Because their income is mostly from capital gains. So the guy that works a job at shop pays 35% and a billionaire pays 15%. All that is being done now is some of this is coming in line with everyone else that actually earns money working

Yes but this also hurts the 99% of investors.....so again like everything else any rule or law that you make that serves everyone will have (unfair) advantages or dissadvantages for those at the extremes of the bell curve.

 

[Vega$ NSX]

Special capital gains rates are exactly how the wealthiest of the wealthy manage to pay the lowest percentage of taxes. Because their income is mostly from capital gains. So the guy that works a job at shop pays 35% and a billionaire pays 15%. All that is being done now is some of this is coming in line with everyone else that actually earns money working

Not exactly. Say you have two people. One person who makes $250,000/yr and one that makes $50,000/yr. The person paying $250,000/yr pays about 30% of his $250,000 ($75,000) in taxes while the person making $50,000/yr pays about 15% ($7,500) in taxes.

But say the guy who made $250,000, instead of buying a sports car or travel, saves $200,000 and puts it into an investment (like a stock) that grows in value another 10% the following year ($20,000). Because that is income, he has to pay capital gains tax on that amount ($20,000). If he made no money the following year, then his total tax rate would be 15% based solely on the income of the increase of his investment. Very rich people who have huge investments get a majority of their income from these investments so the majority of their tax rate is based on their capital gains tax rate.

He already paid 30% on the initial $200,000 he invested so would it be fair to paid another 30% on the amount he earned in interest? Furthermore, why punish the guy for doing the right thing and saving that money for retirement or a rainy day so that he won't need to live off of government aid in the future. A higher tax would only incentivise him to just spend all of his money instead of throwing it away in taxes. Plus, his $200,000, if invested in stocks or bonds is helping infuse money back into our own companies that could use the capital to grow and expand our economy.

If someone is paying capital gains tax it's a good thing. It means:

1) He's already made a ton of money and paid a ton of taxes at a higher tax rate (30% or so) on that money he earned.
2) He's invested it somewhere where it has been infused back into our economy, like a stock or bond.

 

[docjohn]

Good point Vegas most of the average investors stocks are purchased after already passing through thier income tax bracket.Another possible side effect of higher capital gains tax rates would be more incentive for folks to place thier investments in tax defered vehicles like 401k or 529's ect.

 

[blue_myriddn]

Good point Vegas most of the average investors stocks are purchased after already passing through thier income tax bracket.

Which is why it would be nice if the capital gains for average investors was minimal. Heck, for folks who gain less than $25k in capital gains per year I would even consider making some sort of tax incentive to encourage more lower income folks to invest rather than spending their money on fancy cars