Waiting for long-term capital gains?

[bryant9967]

How do you guys determine whether a stock position you've held for say, 6 months, is worth holding for another 6 just to save the 15% or so on taxes by making that position categorized as a long-term capital gain? I'm having a lot of apprehension right now when considering what to do with stocks that have had large gains but may be due for a pullback. Do I not sell now before the correction if I think it will correct down less than 15%? This is not new to me but I have never felt the need to be generally selling out of big gains more than now. Is there any technique to increase the income?How Much Money Can I Make?

[WallStGolfer31]

There are no secret techinques to make money in the market (I wish there was)

You must take on risk to earn above the risk free rate. The question is, how much risk are you willing to take?

[investoid]

I'm glad Canadians don't have to worry about stupid tax laws like that - our capital gains are taxed at half our marginal rate regardless of holding period. We do have a 30-day waiting period to rebuy if we're trying to claim capital losses though.

In my value-oriented opinion, you should sell a stock when you feel it's reached the high end of its intrinsic value. Forget about the holding period, just buy when its undervalued and sell when its nearing or reached overvaluation. I understand this is an ideal world scenario, but I'd still stick with it under most circumstances.

[aquaswim47]

Well, if you think the stock could reasonably drop in price, than you should sell. For example, if the stock, in your opinion has 0% return; it is just as likely to drop $5 as gain $5, than you should sell. If you think the stock will rise $6.67 and drop $3.33, than you should continue holding it. I don't like holding simply to pay only a long-term capital gains. Now, that could mean paying 25-35% in taxes instead of 15% or 10-15% instead of 5%, but it's better to keep 65% of the gain than have no gain at all. Remember there is risk that the stock will increase in value after you sell it or lose value while you keep it. Which risk you prefer should be the ultimate factor in your decision. The tax angle only matters when you are just as satisfied keeping the stock (and the potential loss) or dumping the stock (and foregoing its gain).

Take care.

[pedro_9k6k]

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