Your Questions About Money Making Stocks For 2010

James asks…

How are you balancing your portfolio now in May 2010?

My observation is the stock market may be a weakening phase, but looking at past 3 or 5 year trend we’re not yet near the 2008’s market condition, but would you say now could be the time to sell stock funds and rebalanced towards fixed income funds such as short-term bonds or GNMA funds backed by the government of United States?

What is your current strategy? I think for those few who have the skill, and inside-connections, you should be able to make money in all conditions of the market whether bull or bear or in-between?

John answers:

Your last statement is true, but it is devilishly difficult to acquire those skills. Not many do.

I have been shortening my positions in stocks that are somewhat more risky. Just putting the money into cash.

Things indeed do not look all that great at the moment. The market seems to be very schizophrenic, up 200 down 200. That is not good. Sort of time to move to the sidelines.

Joseph asks…

Wash sale basis adjustment for a stock?

I’m having trouble understanding the basis adjustment on the wash sale rule pertaining to my situation. I bought 960 shares of a stock in July, sold it within a week and lost about $10,000. I then bought 800 shares back (same stock) at $80.85 about a week later and held. I bought another 68 shares as the stock was falling ($46.XX), and another 500 ($18.22) when it was dirt cheap last week. After the stock rose a little I sold 500 shares to make quick profit on the last purchase. After the sale I noticed that my average share price went way down and it sold the shares that I bought at $80.85, resulting in a roughly $40,600 loss instead of a $790 gain that would have been realized had the shares purchased at $18.22 been sold.

I understand the basis adjustment for one sell then buyback, but if I decide to make trades like this in order to get my money back, does the basis keep adjusting as I make a profit? For example, I’ve already lost $10k once and $40k another time. Is my basis now $50k, or can you not add losses? I do plan to buy back more shares this week so I won’t be able to report that $40k loss.

Also, if I make my money back and a profit in 2010 on this stock, can I include my losses from this year to offset my gains in 2010 since I won’t be able to deduct this years losses because I repurchased within 30 days?

This is blowing my mind and I’d appreciate any help. Thanks in advance.
Thank you, clark. Is there a certain time frame that I have to make this money back in order to not pay taxes on the money that I make back when I buy more shares?

I already lost $50,000 this year and can’t claim a loss since I’ve bought back within 30 days. Say in two years I come away with a $20,000 profit on this stock after a few trades (assuming no profit is turned until 2010). I’ll only pay taxes on that $20k profit regardless of how many times I trade it, right?

John answers:

You would add your prior losses to the current cost of the stock.

If you bought it at $20000, sold at 10000 then bought it back for 5000, you would have a basis of $ 15000 (20K-10K+5K).

Daniel asks…

Is it better for me to file taxes jointly ? or separate from my husband?

we got married in 2010 and previous to that when both single my husband had to pay taxes and I got a refund , he make double of the money I make and he also bought a house months before we got married , If we file together will I still get a refund ? or we would have to pay taxes because of everything that he owns ( house/stocks ) we didnt sign a prenup …Im really confused and dont know what to do..

John answers:

Married filling jointly is beneficial….

You can evaluate both conditions with taxpreparer (“taxinfo@globalprimetaxation.com”) with in 12 hrs the tax experts will get back to you with your tax summaries… If you are satisfied.. You can file your tax return with them… Otherwise you ignore there services…

They are certified public accountants, attorneys, chartered Accountants, masters in business Administration…

Michael asks…

Why is the fed trying to lower the value of the dollar even more?

They’re not dumb, they say it’ll be good for the economy and they plan on achieving this by purchasing treasury bills, but anyone knows it is going to cause a lot of harm. Why is this administration ruining our country and the economy?
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The Fed’s New Bubble (Masquerading as a Jobs Program)

By Robert Reich|Oct 16, 2010, 11:02 AM|Author’s Website
http://wallstreetpit.com/48430-the-feds-new-bubble-masquerading-as-a-jobs-program

The latest jobs bill coming out of Washington isn’t really a bill at all. It’s the Fed’s attempt to keep long-term interest rates low by pumping even more money into the economy (“quantiative easing” in Fed-speak).

The idea is to buy up lots of Treasury bills and other long-term debt to reduce long-term interest rates. It’s assumed that low long-term rates will push more businesses to expand capacity and hire workers; push the dollar downward and make American exports more competitive and therefore generate more jobs; and allow more Americans to refinance their homes at low rates, thereby giving them more cash to spend and thereby stimulate more jobs.

Problem is, it won’t work. Businesses won’t expand capacity and jobs because there aren’t enough consumers to buy additional goods and services.

The dollar’s drop won’t spur more exports. It will fuel more competitive devaluations by other nations determined not to lose export shares to the US and thereby drive up their own unemployment.

And middle-class and working-class Americans won’t be able to refinance their homes at low rates because banks are now under strict lending standards. They won’t lend to families whose overall incomes have dropped, whose debts have risen, or who owe more on their homes than the homes are worth — that is, most families.

So where will the easy money go? Into another stock-market bubble.

It’s already started. Stocks are up even though the rest of the economy is still down because of money is already so cheap. Bondholders (who can’t get much of any return from their loans) are shifting their portfolios into stocks. Companies are buying back more shares of their own stock. And Wall Street is making more bets in the stock market with money it can borrow at almost zero percent interest.

When our elected representatives can’t and won’t come up with a real jobs program, the Fed feels pressed to come up with a fake one that blows another financial bubble. And we know what happens when financial bubbles get too big.
Also who are they trying to fool? Lower interest rates is not inflation. There will be even less money circulating. When a mortgage payment is $1000 instead of $2000 it doesn’t mean they have an extra $1000 lying around to spend. Do they think we’re that dumb?
We import WAY MORE than export – ever seen anything that doesn’t say made in China? So that argument isn’t going to fly. It would have the opposite effect on the US compared to China. Plus even the gov isn’t using that as a benefit, just democrats trying to scramble for an excuse why the gov would screw over the dollar even more.

John answers:

It’s like a junkie going for a fix – it eases the pain in the short run but causes far more problems down the road.

The government doesn’t have the courage to go “cold turkey” and cause pain in the short run, for future benefit.

John asks…

Why did I loose half of my money in my portfolio on investopedia.com?

I was doing pretty well yesterday and made an extra $2000 doing day trades on investopedia.com however when I checked my earnings I found that my portfolio overall said -97.30% instead of the usual +- 3.00% when I do day by day stock trading. This has never happened before. Somehow somewhere I lost close to $50,000 like it just disappeared and I don’t know what happened to it. I sold all my shares at the end of the day to bring in a positive return of $2000. All my sells went through by somehow my account lost over half of what it started with for no apparent reason. perhaps an error or glitch? I should have around $102,000 (initially start at $100,000) but instead my account only says $59,000. It’s like I was robbed or something?

Anyone use investopedia? how can I get a correction?

This is all pretend money but still, it’s confusing.

this is the record of everything I did yesterday and I can’t find out what happened yesterday 7/12/2010.

The first number after the stock symbol is the number of shares being bought along with the value per share. The last two numbers are the total amount of money for that trade and the last sum is my portfolio value. Notice how it starts around $99,000 from the previous day (I lost some) but at the end of yesterday it is now $59,000. I can’t find the reason for this and it doesn’t make sense. Did I do something wrong?
2:20 PMSell MOT2002$6.97$13,923.94$59,195.69

2:13 PMSell BP200$36.65$7,309.99 $59,210.66

2:04 PMSell ACE100$55.06$5,486.01 $59,259.86

1:44 PMBuy MOT1001$6.98$7,006.97 $59,286.64

1:34 PMSell GOOG103$475.70 $48,977.11$59,227.47

1:26 PMBuyBP200$36.58$7,335.99 $59,084.79

1:25 PMBuy ACE100$55.02$5,521.49 $59,104.78

1:17 PMSell AES4000$10.18$40,700.01$99,924.45

10:02 AMBuy@open MOT1000$6.73$6,749.99 $100,013.64

10:02 AMBuy@open AES 4000$10.17$40,699.99$99,713.63

10:02 AMBuy@open GOOG103$472.37$48,674.10$99,473.03
I know it’s hard to determine from that but that’s all the info I have to show, my portfolio shoes that I only have $4000 currently left in my portfolio and everything else I sold(cashed in) around 2pm yesterday. I know for sure everything was in the green which is why I cashed in.

At on point my account value said $102,000 now it’s $59,000.

My question is where would $42,000 dollars just disappear to?

John answers:

You are trading on a Simulator.

On your portfolio page, scroll down to the bottom and click on Help Topics.

At the top of this page, click on “let us know if you can’t find the answer”

Your long list of info is too much information for anyone to evaluate for a simulated game. We don’t have more information than you do, or access to your account like you do.

It would be easier to close out the game and start a new one, and then you would have $100,000 instead of $99,000 or $54,000 or whatever.

There may also be a chat room on the simulator page.

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