The Investment Thread (19 Viewers)

[Tapxe]

Accurate or unpossible?

 

[DaveXA]

Accurate or unpossible?

Not entirely accurate. You can borrow against the stock you own, but it's still a loan and the stock is still collateral. Also, the line of credit still has to be approved by a bank who is lending the money and holding the stock as collateral.

And if the stocks go down in value, depending on the type of loan, whether it's on margin or a line of credit, if the stocks go down in value you could face a margin call or the bank can demand immediate repayment of the debt.

Borrowing against company stock is quite risky and is only advisable in a narrow range of circumstances.

Margin accounts are fairly common (in investing, people use the margin amount to buy additional investments) but you can only borrow so much and if the value of the stocks borrowed against go down significantly, you can face a margin call, which can create a host of problems for the account holder. So it's fairly risky.

There are methods to reduce taxes that the rich can use, but borrowing money against company stock doesn't seem like a good strategy to me. And it's still a loan that you have to pay interest on and when the stock is sold you still pay capital gains taxes on the increase in value. So... .

 

[Tapxe]

Not entirely accurate. You can borrow against the stock you own, but it's still a loan and the stock is still collateral. Also, the line of credit still has to be approved by a bank who is lending the money and holding the stock as collateral.

And if the stocks go down in value, depending on the type of loan, whether it's on margin or a line of credit, if the stocks go down in value you could face a margin call or the bank can demand immediate repayment of the debt.

Borrowing against company stock is quite risky and is only advisable in a narrow range of circumstances.

Margin accounts are fairly common but you can only borrow so much and if the value of the stocks borrowed against, you can face a margin call, which can create a host of problems for the account holder. So it's fairly risky.

I figured there was more to it. Also figured someone here might be able to assist. Thanks

 

[DaveXA]

And fwiw, that illustration is essentially entirely wrong. Pretty much no one pays a 40% effective rate for income taxes. So first section is wrong. Second section, long term capital gains rate is capped at 20% and ranges from 0%-20% depending on income and short term rates are taxed at same rate as your ordinary income tax rate. 25% is an arbitrary number.

 

[Tapxe]

And fwiw, that illustration is essentially entirely wrong. Pretty much no one pays a 40% effective rate for income taxes. So first section is wrong. Second section, long term capital gains rate is capped at 20% and ranges from 0%-20% depending on income and short term rates are taxed at same rate as your ordinary income tax rate. 25% is an arbitrary number.

Yeah, source is gone from the feed.

 

[DaveXA]

Yeah, source is gone from the feed.

Not surprising lol.

 

[B4YOU]

Accurate or unpossible?

Not a tax expert.

I think the error is not describing the types of stock offered. RSUs (stock grants) are taxed as W2 income. ISOs/stock options (employee purchase) are more complicated. ISOs are not taxed as W2 income but part of AMT. CEOs are paying 26-28% on the spread between the excise price and market price for those options. Once they sell, they pay capital gains taxes on the gains.

CEOs paid in RSUs for pennys/share or purchased ISOs very cheap and held with 1000-4000x growth are how they get super rich. Portfolio loans are a thing. Musk has personal loans of 3.5B.

Can you take a portfolio loan, invest it in real estate or another business, and deduct the interest on loan? Yes. Could a wealth person live off a portfolio loan at a 7-9% interest rate to avoid paying 20% LTCG taxes? Sure. Could a wealthy person set up a company in a tax haven, invest in that company, claim a loss on that money to reduce tax burden, and the IRS lack the funding to deep dive on that company/losses? Probably. The Panama Papers were all about fraud and tax evasion. There were lots of international names, Americans not so much. Makes me wonder who was the hacker.

 

[efil4stnias]

Welp Jensen - you !@#!@#@! me.

Sitting here with a !@#!@#!@# note on my desk "call FA - sell IONQ profits"

Got so busy yesterday, totally forgot to call him.

Woke this am to the bottom falling out on the statement from NVIDA CEO Jensen saying the tech is still 15-30 years out.

Oh yeah???? Hows that Blackwell chip coming along Jensen? still delays?

UGH.

 

[LonghornSaint]

Welp Jensen - you !@#!@#@! me.

Sitting here with a !@#!@#!@# note on my desk "call FA - sell IONQ profits"

Got so busy yesterday, totally forgot to call him.

Woke this am to the bottom falling out on the statement from NVIDA CEO Jensen saying the tech is still 15-30 years out.

Oh yeah???? Hows that Blackwell chip coming along Jensen? still delays?

UGH.

I had just picked up some RGTI (down 48% now) as well as QTUM etf a few days ago, I feel your pain.

 

[efil4stnias]

I had just picked up some RGTI (down 48% now) as well as QTUM etf a few days ago, I feel your pain.

i got in IONQ in mid oct- $15~ range.

im SICK.

my buddy in LA- QUBT at $1.77 he was riding the wave- his wave crested this morning too. So i dont feel AS BAD as he does. ( he put in way more $$$ than i did and he so mad rn, he wont sell even at $9 lolol )

 

[Rickboy]

I had a pretty good December. I've got over 300 shares of AVGO (Broadcom) and it exploded from $180 to $250 after their last earnings. One of my co workers has several thousand shares and became a multi-millionare and is deciding whether or not to retire.

 

[SaintInBucLand]

Making investing strategies into quantum computing plays was foolish in the first place unless you were just going to get in and get out.

Quantum computing is decades if ever becoming commercially applicable.

People really got duped with the quantum computing hype the last couple months and the rug pull is really hurting the past couple weeks.

 

[efil4stnias]

Making investing strategies into quantum computing plays was foolish in the first place unless you were just going to get in and get out.

Quantum computing is decades if ever becoming commercially applicable.

People really got duped with the quantum computing hype the last couple months and the rug pull is really hurting the past couple weeks.

I was ( in/out)

i just didnt out in time lolol.

story of my investing career- day late and 40% lower than i would have liked. lol.

btw- im KEEPING that sticky on my desk for as long as it will stay there as a REMINDER ( I did call my FA and we have a sell $ if and when it hits the number both up and down- im still in the black, but not near the black i was just 24 hrs ago )

oh well.

anyone need insurance?!?!?! lololol. i need to make some money back- holla if you do!

 

[SaintInBucLand]

I was ( in/out)

i just didnt out in time lolol.

story of my investing career- day late and 40% lower than i would have liked. lol.

btw- im KEEPING that sticky on my desk for as long as it will stay there as a REMINDER ( I did call my FA and we have a sell $ if and when it hits the number both up and down- im still in the black, but not near the black i was just 24 hrs ago )

oh well.

anyone need insurance?!?!?! lololol. i need to make some money back- holla if you do!

Well that stinks, sorry to hear that. When I saw the press release by Google touting their Willow chip, I was playing the Jim Carey 'Oh boy, here we go' meme in my head. You had all the fintech news sites abuzz and acting as if we were going to have quantum computing phones in our hands in the next 5 years.

For the last year or so I have been dipping my proverbial toe into learning quantum mechanics(almost to the point I was thinking of taking a few college level linear algebra courses).

The sheer logistics involved in quantum computing makes the prospect of actually being able to use them in commercial applications is so far away most of us on this board will be dead or in the twilight of our lives before it even sniffs the possibility of being commercially applicable.

Don't even get me started on the error correcting problem or the q-bit problem when it comes to quantum computing. Then we have to get into the power and cooling logistics.

This is a really good watch if you have the time: