Discussion ***Official*** 2021 Stock Market Thread

[FelixDeCat]

I told you guys Inflation was real.

Anyway, I sat on my hands today and did nothing. Need things to settle a bit.

Right now it's too volatile both up and down to trust any stock price for a long or short trade. If I don't understand what I'm seeing I usually lose money.

 

[FelixDeCat]

Crypto stocks are greeting the apocalypse tonight:

 

[Svnla]

Musk said Tesla has “suspended vehicle purchases using bitcoin"

Elon Musk says Tesla will stop accepting bitcoin for car purchases (cnbc.com)

Watch out, bitcoin.

 

[brianmanahan]

this is good for bitcoin

 

[Red Squirrel]

You can't pay bills with crypto or buy supplies to make the company run. That's the big downfall of accepting it as payment, you can only buy stuff from other companies that accept it and chances are most of their supply chain does not.

 

[jpiniero]

AT&T is spinning off their media assets and merging it with Discovery. This includes CNN and HBO.

Bloomberg - Are you a robot?

www.bloomberg.com

 

[Brainonska511]

You can't pay bills with crypto or buy supplies to make the company run. That's the big downfall of accepting it as payment, you can only buy stuff from other companies that accept it and chances are most of their supply chain does not.

It also doesn't show up on your balance sheet as profit as long as you hold it in crypto, so it hurts your apparent bottom line too, especially if you're a publicly traded company.

 

[FelixDeCat]

It also doesn't show up on your balance sheet as profit as long as you hold it in crypto, so it hurts your apparent bottom line too, especially if you're a publicly traded company.

Not sure about that. When I took my accounting classes a long time ago I remember that there were so many creative ways to account for assets, liabilities and capital.

Its a profit or loss at the point of sale not the point of exchange. If you make or lose money in the exchange back to USD thats a separate accounting entry, so you hold hedges to offset this.

 

[zinfamous]

Not sure about that. When I took my accounting classes a long time ago I remember that there were so many creative ways to account for assets, liabilities and capital.

Its a profit or loss at the point of sale not the point of exchange. If you make or lose money in the exchange back to USD thats a separate accounting entry, so you hold hedges to offset this.

Good point, but it wasn't until last year that crypto was recognized, essentially defined as "What it was" in the eyes of the IRS, right? It isn't a stock and it isn't cash, and being very novel to the eyes of the taxman and the investment world, I don't think it "fully exists" within the standard realm of accounting, to be recognized as typical assets, liabilities, or capital, right? At least, it's a very, very new thing.

 

[Brainonska511]

Not sure about that. When I took my accounting classes a long time ago I remember that there were so many creative ways to account for assets, liabilities and capital.

Its a profit or loss at the point of sale not the point of exchange. If you make or lose money in the exchange back to USD thats a separate accounting entry, so you hold hedges to offset this.

Good point, but it wasn't until last year that crypto was recognized, essentially defined as "What it was" in the eyes of the IRS, right? It isn't a stock and it isn't cash, and being very novel to the eyes of the taxman and the investment world, I don't think it "fully exists" within the standard realm of accounting, to be recognized as typical assets, liabilities, or capital, right? At least, it's a very, very new thing.

I was thinking of a few articles I saw on this. It basically gets counted as an intangible asset right now, with all the pros and cons associated with that type of asset:

Tesla Bitcoin Bet Exposes Limits of Crypto Accounting Rules

For years, U.S. accounting rulemakers have rejected calls to write accounting rules for digital assets like Bitcoin, saying too few companies make significant investments in them. Now enter Elon Musk.

news.bloombergtax.com

The upshot: A company buying or investing in Bitcoin takes the value of the cryptocurrency at cost and records it as an asset on its balance sheet. There it stays, at the same amount, unless its value declines. If the company sees signs that the value has weakened, the company must record an impairment, which hits the income statement and reduces earnings. It must test the asset for impairment at least once a year, but more often if there are indications that the value is lower.

For a wildly fluctuating currency like Bitcoin, there could be plenty of signs prompting the company to test for impairment. But spikes in value get ignored. Under the accounting rules, a company can’t adjust the value of the asset upward. If it sells the currency at a high point, that’s when it gets to record the gains, Schell said.

To me, it seems the short answer is, if the bitcoin holdings go down in value, they may have have to report losses (even if currently unrealized), but if it goes up in value, they can't report the gains until they're realized.

Edit:
I would say, it would also seem like a bad idea if you're a publicly traded company and your core business is not being an investment vehicle for cryptocurrency.

 

[dasherHampton]

My 10 NVAX shares are up $150. Should I cash out?

I mean -NVAX ain't going back up to $280, is it?

 

[njdevilsfan87]

The silver chart looks like it is ready for a massive breakout. Inflation is happening all around us. Companies are even raising their wages. This might be a good place to ride out some short-term turbulence if you're not feeling the indices. Maybe some mining stocks if you want exposure to more volatility - but I'm not expert on those, just looking at the macro picture here so I stick to the pure metal ETFs whenever I look in this sector.



Inflation is such a weird place because retail demand dries up so some stocks will fall, but those who can afford assets will just take out as much leverage as possible and pump them away.

 

[FelixDeCat]

My 10 NVAX shares are up $150. Should I cash out?

I mean -NVAX ain't going back up to $280, is it?

I asked Alexa for Random Yes or No and she said, "Hmmm, I think yes.". So Alexa thinks you should pocket the $150.

Of couse, Alexa could be wrong.

 

[FelixDeCat]

The silver chart looks like it is ready for a massive breakout. Inflation is happening all around us. Companies are even raising their wages. This might be a good place to ride out some short-term turbulence if you're not feeling the indices. Maybe some mining stocks if you want exposure to more volatility - but I'm not expert on those, just looking at the macro picture here so I stick to the pure metal ETFs whenever I look in this sector.

Inflation is such a weird place because retail demand dries up so some stocks will fall, but those who can afford assets will just take out as much leverage as possible and pump them away.

Gold and Silver have made nice moves up the last 5 days.

I dont really trade metals anymore but I would mention that if you trade a trust stock (gold trust or silver trust) the basis on those trades are not reported to the IRS so you have to list all your buys and sells on IRS Form 8949, which is a pain in the $$$ - and the reason why I avoid trust stocks.

 

[Dr. Detroit]

Gold and Silver have made nice moves up the last 5 days.

I dont really trade metals anymore but I would mention that if you trade a trust stock (gold trust or silver trust) the basis on those trades are not reported to the IRS so you have to list all your buys and sells on IRS Form 8949, which is a pain in the $$$ - and the reason why I avoid trust stocks.

I got 3 different K-1's this year for trading things like USO & ZSL. Definitely a pain in the ass.

 

[njdevilsfan87]

That's odd, they show up on my 1099 but they don't account for the lack of wash sales properly. So that's the only thing that needs modifying on my end (with TD).

 

[FelixDeCat]

I got 3 different K-1's this year for trading things like USO & ZSL. Definitely a pain in the ass.

The only thing worse than trust stocks are "limited partnership stocks" like Oil / Gas Trusts and Pipeline stocks like Energy Transfer Partners.

Any time you see the word "partner" or "limited partner" in a stock name RUN!!! Otherwise you get the dreaded K1. If you are a member of an LLC you may also get a K1.

Schedule K-1 Tax Form: What Is It and Who Needs to Know?

What is a Schedule K-1 tax form? And how is it used? We'll help you become more familiar with the Schedule K-1 tax form.

www.fundera.com

 

[FelixDeCat]

That's odd, they show up on my 1099 but they don't account for the lack of wash sales properly. So that's the only thing that needs modifying on my end (with TD).

I havent traded trust stocks since 2018 because of the hassle. Things may have changed. But on the last 1099B brokerage statement I can recall, trading trust stocks are (were?) listed as "basis not reported to IRS". When you see that you have to list each buy and sell individually.

A long time ago, listing each buy and sell of all stocks and options on Schedule D was required. At one time my Schedule D had about 25 pages of trades. Then the laws were changed and brokers were required to report the basis and proceeds of stock (and eventually option) trades in one nice tidy report to the IRS. So now all you had to do was file a Schedule D with consolidated buys and sells, which was super convenient.

Noncovered Security: Definition, Reporting Rules, vs. Covered

A noncovered security is an SEC designation under which the cost basis of securities that are small and of limited scope may not be reported to the IRS.

www.investopedia.com

 

[dasherHampton]

My accountant (who I might unfortunately lose this year) told me that programs like Turbotax have made tremendous strides in dealing with K-1 forms over the past few years.

He said it's not that hard anymore.

 

[Tweak155]

When I used TT this past year, it connected right to my TDA account and imported everything. Since all I did was buy and sell shares of single companies, it was pretty straight forward.

 

[FelixDeCat]

So the powers that be have decided we need more selling and suggest shorting the market based on the crypto crash.

 

[dullard]

I got 3 different K-1's this year for trading things like USO & ZSL. Definitely a pain in the ass.

Yes, the first K-1 that I got from trading metals was a surprise. I made enough money to be well worth it, but those K-1s are certainly more work. Metals aren't easy money any more, so I've been out of that for a few years.

 

[dasherHampton]

My SAVA puts are sitting on a nice profit right now and January is a long ways away.

I'm really thinking hard about cashing out.

 

[KB]

My accountant (who I might unfortunately lose this year) told me that programs like Turbotax have made tremendous strides in dealing with K-1 forms over the past few years.

He said it's not that hard anymore.

I did it using TaxAct and it wasn't that difficult, maybe 5 screens, but it was annoying and not worth it. There are plenty of C-Corp worth buying that LPs aren't worth it.

 

[Brainonska511]

This seems like a good place to ask -is this worth it?

My company is again soliciting for their ESPP, but I don't think it's not really worth it for the somewhat marginal gains, and the increased complications come tax time:

5% discount
Purchase day is last day of the period (each period is 3 months)
Purchase price is average share price on said last day
Minimum $40 fee to sell, but no holding period
Stock is for a services-based industry, and has been pretty constant at $70-80/share for the past 5 years (not including the big market dips)

If I did buy in, I'd probably sell every 6 months, just to mitigate some of that minimum selling fee.