Anyone selling stocks in advance of the fiscal cliff?

[humandraydel]

So, did you sell? The S&P 500 went up 1.15% today. I love these threads because we can revisit in 3-6 months and see how well our collective market timing skills worked

[disneysteve]

So, did you sell? The S&P 500 went up 1.15% today. I love these threads because we can revisit in 3-6 months and see how well our collective market timing skills worked

I have not made a decision today. I've been too busy watching the two stocks in question shoot to 52-week highs.

The BAC is actually in my SEP IRA so there would be no tax consequences to selling it. The FXCB is in my taxable account but would be a long term gain. I own almost 600 shares of that so I may put a trailing stop on at least a block of them to lock in some of that profit in case the price does fall.

[Kircheis]

I have sold some stocks throughtout the year to harvest some gains, but I was going to keep most of the stocks that I have (even the high dividend paying ones). I like to think that my portfolio is fairly well diversified and did not want to make any significant changes in my plan, especially since there is still significant confusion about how the taxes will change.

[elessar78]

I am not a market timer by any means, but that doesn't mean there aren't times when reducing equity exposure might not be a bad idea. I'm wondering if this is one of those times. Several things I've read have suggested that regardless of the long term outcome of the fiscal cliff issue, in the short term, if a deal isn't reached by 12/31 and the tax hikes all go into effect on 1/1, the market will react badly and we could see a serious drop at the start of the year.

At the very least, I'm thinking about cashing out of some profitable positions I have in a couple of individual stocks. I have two bank stocks that are up 55% and 77% since I bought them (the first was bought earlier in 2012, the other is a longer term position). I don't think there is any fundamental reason for those prices to drop but if everything takes a dive, I'm sure they will go right along with it. Of course, when the market recovers, which I believe it will ultimately, they should go back up, but one never knows.

As for my bigger holdings in mutual funds, particularly in retirement accounts, I could potentially back off on stock holdings for a month until the dust settles and then reinvest possibly at a significantly lower price. Again, I realize it is all market timing but it has been on my mind.

What are your thoughts?

The logic seems tight. If the market does go down on Jan 2 then you're in a position to get more value for your buck if you buy back in. Stocks are on sale! Or you can buy back to the same level of equity with less $$.

Another way to think about it, is just to hedge your bets and sell off, say, half and ride out the market with the other half.

[disneysteve]

So, did you sell? The S&P 500 went up 1.15% today. I love these threads because we can revisit in 3-6 months and see how well our collective market timing skills worked

Here's what I've done today.

I put in a trailing stop order on my BAC shares in my SEP IRA. I set it to trigger at a 3% drop. At the current price of about $11.25/share, that would mean dropping to about $10.91 which would give me about a 56% profit on a stock I purchased in May 2012. I'd be happy with that outcome. And this way, if the stock continues to climb (which doesn't seem to be happening today but one never knows), the selling point rises along with it.

I haven't acted on the FXCB yet. Still thinking about that one. I should probably put a trailing stop on that as well, at least on a portion of the shares.

[EEinNJ]

Yes, but not because of the cliff. Mostly, for tax purposes. I get taxable distributions from funds, and I try to offset them by selling any dogs.

Whether they come to an agreement (and they have to) sooner or later doesn't matter much. In my view, it's a foregone conclusion that taxes on capital gains and dividends will go up, along with payroll & income taxes.

In light of this, though, I'm reconsidering future investments to be as tax efficient as possible. Unless you need the income, now might be a good time to shift away from dividend stocks & high yield distribution funds.

[disneysteve]

Ok, I'm done tinkering for now. I put in a trailing stop on the FXCB for about 1/3 of my shares at 4%. If that triggered now, I'd have a 75% profit on those shares (bought in 3/09). I'm going to hold onto the rest. I still think there is a chance that this bank will get bought out at some point which could be profitable for shareholders.

[Slug]

Great, now rest easy while we go over this ledge.

[disneysteve]

My BAC order triggered this morning at $11.16. So in 7 months, I made a $4.16/share profit from purchase at $7.00/share so almost 60% gain. It is an IRA so no taxes due. I can deal with that.

[Slug]

Good stuff! I exited XOM this morning for a nice gain too. I'm sitting on a large cash position at this point, but still waiting to buy in. Once everyone gets that first paycheck and realizes everyone's taxes went up when the payroll tax holiday expired, then this little rally might fizzle.

[disneysteve]

Wow. The market sure had a happy new year! The Dow was up 308 today. Looks like I sold out a bit too soon but I'm okay with that because the outcome could have been drastically different had no deal been reached. And I only sold a very small portion of our portfolio. It should be interesting to see what happens in coming days.

[humandraydel]

Wow. The market sure had a happy new year! The Dow was up 308 today. Looks like I sold out a bit too soon but I'm okay with that because the outcome could have been drastically different had no deal been reached. And I only sold a very small portion of our portfolio. It should be interesting to see what happens in coming days.

You beat me to it Steve! After today I had to come back to this thread Of course, to be fair, I also realize that 3-6 months from now the 2.5% gain doesn't mean anything. Heck, maybe even tomorrow the market will decide they didn't do ENOUGH and go down 3%!

[disneysteve]

You beat me to it Steve! After today I had to come back to this thread Of course, to be fair, I also realize that 3-6 months from now the 2.5% gain doesn't mean anything. Heck, maybe even tomorrow the market will decide they didn't do ENOUGH and go down 3%!

Yep. I am perfectly happy with my trade outcome. Could have been better but could also have been worse. I got out at a price that I was very satisfied with. As for my FXCB, I still hold nearly 300 shares so if they continue to do well, I still benefit.

[humandraydel]

On Dec 17th, 2012 (the date of the original post) the S&P was at 1430.36. Today it is at 1494.81 - a 4.5% increase. If you sold on Dec 17th, you have to be asking...should I buy now and LOCK IN A 4.5% LOSS?? Or should I wait, hoping the market goes back down? Only time will tell...but it highlights the simple fact that in order to market time, you must be right TWICE!