Friday, July 12, 2013

Boeing, Boeing, Gone... $BA

I started blogging to help educate smaller, retail investors.  Offering hands-on financial insight about investment choices, risk mitigation, protecting gains, eliminating (or controlling) emotion.  I trust that this posting about my Boeing investment experience today, will be of some benefit to you!

You do NOT absolutely want to be in a position where you rely totally on someone else to manage your hard-earned money!  Basic investment knowledge is a must have!

In fact, passing e.g. a Series 7 (U.S.) test to become a licensed Financial Advisor is no different to passing e.g. a realtor certification test, thereby becoming a licensed realtor.  This is not a disparaging comment, but simply a statement of fact.  A license from some formal authority does not qualify a person as an expert, or as someone who cares about your financial well-being, or even proves subject matter expertise and/or knowledge... beyond that which was required for passing the test.

You have to be able to manage and/or understand your investments... otherwise, you will be more likely to lose money somewhere along the line… regardless of whom you may reward with your trust (not to mention, your cash!).

Today, on July 12, 2013, Boeing $BA shares opened for trading at $106.86/share.  I know this for two reasons: (1) I looked it up and (2) I was long $BA (meaning I owned Boeing shares), that were sold today.

I had not planned to close my position (sell my shares).  In fact, my $BA shares were showing a gain of around 40% YTD… so I just loved my Boeing stock!  When I visited Seattle recently, I even visited both Boeing museums, talked to retired Boeing engineers at the exhibits to learn more about the company, marveled and played with the technology on display, and more.  I know... what a geek!

I opened the position above on January 30 2013 at $74.54/share. It closed today (note; I did not say "I closed it today"), via 3% automated Trailing Stop, at a sell price of $104.81/share.


Boeing stock was cruising along quite nicely until around noon, when reports of a fire on an Ethiopian Boeing 787 Dreamliner caused the shares to tank.  By 12:30 pm, $BA was trading at $99.40/share.  From this new low for the day the price could have gone down further.  It did not, and even recovered a little, to close at around $102.

What could possibly be wrong, booking a 40% gain on an investment, in just over 5 months?  You may offer that I now have a tax liability that will cut my gain in half.  And I may counter with “so what”?

With the other half that I get to keep, I can reinvest in $BA, or anything else that will deliver a return on investment commensurate with my investment return expectations and planning.

Because I sold the shares for a profit, I can also buy back into $BA right away.  If I had sold my investment at a loss, and reopened a position immediately, it would be a wash sale and I would not have been able to book the loss as a reduction of personal income for tax purposes.

Boeing is a great company to invest in.  The corporation will probably continue to offer stellar returns in the future, especially once the 787 Dreamliner bugs have been addressed and eliminated, and as airline companies all over the world start and/or continue to replace their aging fleets.

For now, I’m out of my $BA position, and I didn’t even have to think about it.  As soon as the stock had declined 3% off it’s intraday high of $108.13, my 3% Trailing Stop automatically became an executable market order, closing in real time at $104.81… and booking my 40%+ gain as a reward for 5 months of investment risk in a blue-chip Dow stock.

No fancy stuff… no puts, call options, timing the market, etc.  Just a simple, easy-to-use technology tool that automatically executed a sale… while I was out hitting some golf balls at an indoor practice driving range, during my lunch hour!

May your investments take flight, while you also manage risk on autopilot!

(Disclosure: At the time of writing, the author held no position in any of the stocks mentioned above) 

Wednesday, July 10, 2013

What Is A Wash-Sale?: $AAPL

"Instruction: Wash Apple With Care"

Small, retail investors unfortunately often trade equities purely on emotion, selling when equities are trading lower, buying the highs, buying/selling based on rumors, etc.

Methods to help retail investors to control their emotions are topics for future discussions. Losses from the sale of equity investments result in allowable tax loss deductions, reducing taxable income commensurately.

Let’s imagine you’re a die-hard fan of Apple, and you believe this equity will once again reach its all-time high of around $700 in the very near future; especially, as soon as they launch their next great gadget, that will change our world!

Read the full article at StockSaints