Wash Sale Rule – when does it apply?

The American tax code is one of the most complex and comprehensive set of laws there is and can be quite difficult to understand and navigate. Due to the complexities, many investors have questions regarding how the wash sale rule works and what it is.  Here are two important points to highlight about this rule that we will explain below: The Wash Sale Rule does NOT apply to profits or gains of a sale. Only losses. Though you may incur losses,...

Beware of your own tendencies to “Confirmation Basis” in evaluating your investments

SmartStops comments:  If you haven’t learned yet what behavior finance has proven it’s that “Confirmation bias” is that this fundamental principle applies to investors in notable ways. Because investors seek out information that confirms their existing opinions and ignore contrary information that refutes them, they may skew the value of their investing decisions based on their own cognitive biases. This psychological...

The Great Divide Between Stocks & The Economy – a Macro View

SmartStops Comments:   This article from RealInvestmentadvice.com shows that with data going back to 1947, the stock market and the economy will deviate from each other, for a short period of time. The question is do stocks move back down to where the economy is or does the economy move to the leading indicator stocks. Consistently it is the former, stocks will fall back to the wider economy. Cheerleaders for the stock market will say that...

What is the best trailing stop percentage?

First off, there are so many recommendation you can find on the web about what percentage should I use to set a stop loss order or a trailing stop.   The are articles from people to say use a 8%, 10%, 15% or 20% trailing stop percentage. But unfortunately that is the least intelligent way to approach the subject.   In fact, jjust think about using a percentage for a minute.   It’s just a random value , reflects nothing but a price point...

Are we in a Bear Market Relief Rally (as of 4/25/20) with this COVID market driven crisis?

SmartStops Comments:  Another great article from our friends at Realinvestmentadvice.com.    We love that they will  go deep with analysis when there is just way too much bite-size headlines trying to calm investors nerves and support a “bullish” theme and  we’ll have a V-Shaped recovery.  The probability unfortunately of it being a V-Shaped is very very slim.  The economics just don’t support that.  So yes, we agree...