Why NOT to flip this stock.
Let’s say you have $5,000 to start investing. You want to flip this stock and scrape profits every time this stock doubles in price. You make $5,000 in profit every time you flip at double your entry point. Let’s say you are a precision flipper. You get in, it doubles in price, you sell to get your $5,000 profit and you wait to enter again. Let’s say with precision timing, every time you sell, the price drops 1/2 penny and you enter again with $5,000. Rinse and repeat over and over.
So last month your first buy in of $5,000 was at .01.
Here’s how you would flip...
In at .01, out at .02 $5000 profit
Price retraces to .015 and you’re in again.
So here’s what it looks like over 1 year:
In .01, out .02 $5000 profit
In .015, out .03 $5000 profit
In .025, out .05 $5000 profit
In .045, out .09 $5000 profit
In .085, out .17 $5000 profit
In .165, out .33 $5000 profit
In .325, out .65 $5000 profit
In .645, out 1.29 $5000 profit.
So in 1 year of perfect flipping, assuming paying no trade commissions on your part, you just successfully flipped this stock 8 times for double your money each time!!
You just profited $40,000. After the 20% tax you’ll pay, you walk away with $32,000 free and clear.
Now, let’s say instead of flipping this stock, you bought in that very first day and held the shares you got. Locked them up and waited that whole year.
$5,000 gets you 500,000 shares at the first price point buy in of .01.
You held the entire year and sold at the same price as the flip from above, which was $1.29.
500,000 shares x $1.29 = $645,000
Since you’ve held this stock over a year, you pay 15% tax which nets you a free and clear $548,250.
So after 1 year you can profit:
Flipping it perfectly: $32,000
Buying and holding: $548,250
You decide.
