Replies to post #12406 on General Stock Ideas

[bigworld]

gfp: Sorry for the late reply. I've been working far more than usual. Our hospital, which is part of a big national group (HCA) has been lending staff to our sister hospitals in the Houston area as part of the aftermath of Hurricane Harvey. I'm not one of those who volunteered to live in Houston to help out but I've been filling the void that those volunteers left here in Austin. This will probably continue for at least another month. Luckily I love what I do and have the energy to work 50 or more hours a week. At least for a month or two.I'll reward myself when we're back to normal.

As to your question the primary benefit to HDGE, should we ever in our lifetimes see another Bear market, is that in a non tax-deferrred trading account if HDGE is held > 1 year any profit would be taxed as capital gains just like a stock. When you short stocks directly, all profits are considered earned income. Those profits never get capital gains treatment no matter how long the short position is held. IN a tax deferred trading account like a Roth IRA the difference doesn't matter. But say you're in an upper tax bracket at 28 or 35%. The capital gain tax rate is approximately half of that. Depending on the size of the portfolio the tax saving could be meaningful.

But, if this manipulated market keeps ramping up with Central Bank monopoly money than none of this matters. HDGE will never be profitable, and neither will precious metals. I can't predict how long this market can continue to rise because in all of market history we've never seen Central Banks create so much money AND use that money to buy government debt AND stocks. The Bank of Japan hold Trillion of Yen in Stocks. The Swiss National Bank Billions in stocks. The Norway Sovereign Fund is increasing their stock holdings from 70% of portfolio to 80%. Who knows what the Fed owns. And this doesn't even take into consideration Corporate buy backs that also ignore price discovery. We are in uncharted waters. And we are at the point where there are becoming only two outcomes possible. The Central Banks either keep all the plates spinning on sticks or it all crashes and burns in the worst financial armageddon in human history. Only time will tell.