Question

This is my friend and his name is Larry and he is "puzzled" by the concept of short term vs. long term capital gains.

Larry is about to sell some stock on which he will realize a net capital gain of $100,000.

Larry has held the stock for less than a year and he wants to sell it right away. He is afraid the market price will drop.

You need to offer some advice to Larry ..... should he sell now or wait? If he should wait .... how long should he wait?

Feel free to make some assumptions in developing your advice.

Answer 1

I understand that you need to sell your stock so as you are worried for the loss. but selling the stock on the short term gains will be highly taxable as well.

If the stocks have the upward trend in the last few months then one should make the hold for a longer tenure and the stock prices will rise absolutely.

If the trend is downward pricing then one must sell the stock and dont wait for anything possitive.

If the stock is of a well knowned company the prices will boom definitely as the prices depend upon demand and supply of the stock and currently its supply will be high so the prices are low and once the demand for the stock will increase the prices will also boom upon and then one should sell the stock and earn a profit with low taxes as well