Taxes and Buying Highs

Hello hello.

Welcome to the Stonk Enjoyer.

If you are new here, we talk investing and portfolio management… but keep it fun.

Congrats to my 49ers for going to the Superbowl!!! (claiming them because I’m a SF resident).

Also, good work to the Kansas City Swifties, the NFL is so glad ya’ll will be gracing the Superbowl with your viewership.

This is not investment advice and is intended for entertainment purposes only.

Taxes and Buying Highs: Giving Uncle Sam a Slice of the Bread and Then Keep on Cooking 🧑‍🍳

There’s nothing like continuing to invest your money as the S&P hits all-time highs and you’re having to potentially foot the bill from the gains you took in 2023.

Maybe you didn’t have any short-term capital gains or other stock market events to get taxed on… good for you! Keep holding!

But if you got over $10 in dividends or made any other moolah in the stock market, Uncle Sam wants a slice of that bread.

Double-Team Defense

There are two things I want you to keep in mind before you push your 2024 investing goals to next year:

1. Big Tech All-Time Highs are not an indicator of the health of the entire market as a whole.

2. If you pay taxes on gains it means you made money. (duh?)

The combination of tax season and the S&P hitting all-time highs multiple times makes it very intimidating to invest your money right now.

But do not be deceived. The S&P’s current highs are propped up by Big Tech. I talked about this last week because the S&P 500 needs it’s Big Boys.

With that, the other 10 GICS Sectors (which I discussed and assigned Taylor Swift albums to in a past article), are actually nowhere near all-time highs.

So while Big Tech seems overbought, other sectors are full of opportunity.

Also, depending on your time horizon, all-time highs in the tech sector should not scare you off from quality names you want to build on in your portfolio.

And neither should taxes.

Tax SZN Optimism

I’m not a tax professional (obvi) and will avoid ever talking about taxes again because they make me feel confused and annoyed.

This may be the most annoying take you read this tax season but I just simply want to remind everyone that if you have to pay taxes because you collected premiums and made income through your portfolio, you should be net happy.

happiness from gainz > sadness from being taxed on the gainz

= net happy

Do not let Uncle Sam disincentivize you from optimizing your portfolio for income if that is what your thesis is.

Okay so maybe I’m writing this more for myself.

But idk… hopefully it helps your mentality after the tax bill comes in.

BUT ALSO YOU MAY GET MORE OF A REFUND ⬇️

Bracket Creep

In 2024, the good ol’ IRS raised tax brackets by 7% to help mitigate “bracket creep.” 

Bracket Creep is a phenomenon when inflation bumps your income into a higher tax bracket, but your dollars don’t have as much purchasing power. Per the Morning Brew, thanks to these adjustments, tax pros say many refund checks could be higher than expected.

God Speed, Stonk Enjoyers!

(this is never tax or investing advice - only for entertainment purposes🤌)

Weekly Market Tidbits

1. Hawk or Dove?: Today the Fed announces it’s decision regarding interest rates. Up, down, stay the same? We’ll see!

2. 10k Palooza: 1/3 of all companies in the S&P 500 report earnings this week.

3. Stop What You’re Doing and Plan that Trip with the Homies: Yesterday, 1/30, was a national “Plan a Vacation” day. I’m unsure which airline company paid to make this an official “day,” but get in there.

4. Q4 2023 GDP Numbers Looking FRESH: The calculated GDP came in at 3.3%, beating industry expectations. This is a positive sign for the economy & production as a whole.

Meme of the Week

Credit @huntercoldcalls

User Submitted Art

Credit to Abbey Dean Design