That’s pretty much my only two moves - hold cash, or hold stonks/funds. Although I have discovered holding Euros instead of $$ - which has been good to me.
And you have to be so much more right to short a stock than buy a stock. If you buy a stock at random you’re going to make an inflation-adjusted return of 7%. If you short a stock at random you’re going to lose that, plus the inflation, plus the opportunity cost of buying the stock. Now maybe you’re a brain genius and can spot an overvalued stock, but to overcome that sort of headwind you have to be unstoppably right.
TSLA will go down once they turn a profit, that’s how stonks work
TSLA turning a profit will drag every other stonk down with it and usher in a recession.
Good thing it’s unlikely to ever happen!
Thanks, spidercrab! I was really hoping you would respond.
So it sounds like the real answer to my question is that it’s not enough to just think a stock will go down. You have to decide on what you think the timeline is and how much. Then you have to run some scenarios.
The chart was interesting. For example, it seems like the way the puts are priced, buying the $110 put is far worse than the $120 put even though it is ~$500 cheaper.
I know you’ve mentioned it like infinity times in this thread, but can you remind me how you’re holding the Euros? What vehicle are you using and how does it work?
It’s an FTE that tracks Euros vs $$ 1-1 (no leverage). Basically like owning Euros except that I have to wait 2 days if I sell.
Thanks.
Taxed as ordinary income seems bad.
Is that the standard for currency transactions?
If I just got $100K worth of physical euros and stuffed them in a safe deposit box (which is about what I figure the expense ratio comes out to), and then converted them at some point in the future back to dollars for > $100K are any gains going to be taxed as ordinary income?
If you hold for a year I guess it’s taxed as long term capital gains? Most of mine is in my IRA so I don’t think it matters until I withdraw.
I would think no - $100k with of Euros doesn’t sound like a bad idea.
I don’t think that’s the case. In the link you posted it says, “The expense ratio is in-line with other physically held funds, but holding costs are increased due to the fact that distributions and share sales of FXE are always taxed as ordinary income.”
I guess in your case that is true. I tend to hold all my stonks in the IRA and all my cash outside an IRA. Seems more tax efficient that way in the long run. I guess currency trading isn’t exactly the same as holding cash, but the way you’re using it seems closer to that than stonks.
Yeah that sucks when I already have a good job and this is income on top of it. I wonder if there’s an open-end fun (whatever that means) currency ETF that will do what I want.
At least if you lose money you can deduct it from your ordinary income I guess? If not then FXE is totally not worth the rake unless it’s in an IRA.
- TSLA turns a profit.
- TSLA drills.
- Stock market drills more, causing a recession.
- TSLA outperforms the market, hence TSLA actually did well.
- Elon Musk buys everything.
- TSLA
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A mutual fund/ETF will need to distribute all of its profits every year, and that distribution will be an ordinary dividend if the underlying income (e.g., FX gain) is ordinary income. You also don’t get loss passthrough from an ETF, so if there are ordinary losses, you can’t use them (although you might get a capital loss when you sell or a reduced dividend in a later year).
Didn’t this all already happen? TSLA started turning a profit in late 2019, tanked in early 2020, while the overall market tanked more, then did great, and now Musk is talking about buying other automakers.
It is going to be kind of funny when the bear case of “all the other automakers have better self-driving and electric technology” is correct, but Tesla uses like 10% of its stock to buy GM and subsequently dominate those spaces anyway.
They should just buy all of the relevant ones.
Their market cap is basically equal to the next 6-7 largest combined lol
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Nah man, GM is going to get tied up with Nikola and they are going to make beautiful hydrogen/electric hybrid pickups together.
EDIT: Behold:
(Probably not the most relevant critique, but it really pains me that they ruined the edge-to-edge background by not suppressing the native scrollbar…)
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Didn’t they already cut Nikola loose?
Oh, I guess this is true. I like to imagine that there’s some idealistic EVP at GM who was entranced by that one weird GWB SOTU speech where he was all-in on a hydrogen economy and has spent his career trying to make fuel cells a thing. This must be a tough time for him. :(
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