The dollar keeps falling. And stocks keep climbing.
The U.S. currency dropped to $1.46092 to the euro on September 10. It hasn’t been this low since December 2008.
And even though it’s down 13% since it peaked in March, the dollar has a way to go before it finds support.
 The U.S. Dollar Index, an index of the dollar against six currencies, closed at 76.81 on September 10. Support, calculates Arthur Hill on StockCharts.com comes into play at 71-74.
The U.S. dollar and U.S. stocks are now clearly locked into a negative correlation. When the dollar falls, that is, stocks climb.
With the dollar headed still lower, stocks look likely to continue to move up.
Use “Collars” on your position. Any one know how to do this? Suppost to keep a gains locked in at~ the same through out the term on your “collars”.
Is this for realistic? Are they good for delaying a positions gains for better tax treatment?
Buy a out of the money put & sell a Out of the money call? to finance the put?
I’ve heard this tax argument so many times, and it never ceases to amaze me that folks think this way. It is an oxymoron. __ You don’t want to lose your gains, but you don’t want to sell to prevent losing those gains because you do not want to pay taxes on the gains that you may very well not have if you did not sell. __ You should not think that way. Look at your stock market gains as if they are normal income. You pay taxes on your normal income right? Taxes are just part of making money. Accept it. You will be a better investor for it because you will asllow the fundamentals, your gain/loss %, and market conditions to tell you when to sell. In my experience, doing this easily overcomes the negative consequences of the taxes, adjusted for the additional risk involved in holding a stock longer than you should just to avoid paying some tax.
One possible caveat, however, is of course buyng out of the money puts on the stocks you own but do not want to sell after assessing the fundamentals, your gain/loss%, and the overall market conditions. You would do this if (1) you own a stock and believe it may have a healthy pull-back after a notable run-up, and (2) you truely believe it will then contnue to move higher, eclipsing its current level, and (3) you are willing to give up a portion of your gains to buy the puts.
However, this strategy only has mediocre value when used as a tax avoidance scheme, because you would have to keep doing this until the one year tax time frame passes. The fundamental picture for a company, a stock, or the market as a whole can change drammatically in a 12 month time frame. So you’d have to get lucky that this tax driven 12 month time-frame hapenned to coencide with the good graces of the market during that time frame.
Again, I believe that you will be a much more successful individual investor if you let the fundamentals and the markets tell you when to sell, not a desire to avoid taxes.
Yes that would be the thing to do except for the confounding affect of capital gains tax rates for short vs. long term gains. By selling for short term gain you can give up as much as an extra 18% of your gains to state and federal income taxes. 18% is not a bad return.
That’s easy, sell and take your gains.
It is fun to see ones portfolio climb in value day after day but what can we do to protect our unrealized gains should the dollar strengthen?