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<https://www.dimensional.com/us-en/insights/dimensionals-takes-on-the-biggest-financial-topics-of-2022|https://www.dimensional.com/us-en/insights/dimensionals-takes-on-the-biggest-financial-topics-of-2022>

<@U04EQ1L14HG> I think your palladium example in another thread would be an interesting topic here.
While investing in broad indexes is widely considered to be the most responsible investment,  I think  there is a strong case to be made that if you have unique competence/information on a particular topic/industry you should leverage it for investing. I.e. investing in what you know, if you know it *really* well, could be equally responsible and even more so could be considered fulfilling the reason Hashem gave you the wisdom in the first place- to generate more resources for you to serve him with

I would qualify that I would only do it with funds I would be okay with going to 0... So like maybe 5 percent of my assets. It's certainly not a practice I would encourage :joy: I'm just human...

Context <https://frumfinance.slack.com/archives/C04EHDK97K8/p1673748991264399?thread_ts=1673740201.765359&amp;cid=C04EHDK97K8|https://frumfinance.slack.com/archives/C04EHDK97K8/p1673748991264399?thread_ts=1673740201.765359&amp;cid=C04EHDK97K8>

Hi, any day traders here?
(I’m not talking about Robin Hood)

I have a few different stock positions for a specific ticker that I need to sell. I have short term gains, short term loss, and long term loss. Which one should I sell?

My expertise here is lower than in most areas I chime in on, but that won't stop me.

Short term loss

does the percentage of the loss or gain matter?

Don't sell the gains. If you can defer them to later they'll become long term gains and incur less taxes

CleanShot 2023-05-02 at 14.17.28@2x.png

If you had short term loss vs a long term gain that might be a question, but I think in this case short term loss is always the right answer.

Bigger loss just means higher cost basis no? I would think its better to hold on to

CleanShot 2023-05-02 at 14.20.32@2x.png

yeah all three are just different cost basis

so what about if its long term loss vs short term gain?

i might need to sell more than what I have in short term loss

Sell in this order
short loss
long loss
gain

what about when two cost basises are both in the same category but one has higher or lower cost bases?

like if they are both long term loss but one is lower than the other

I would think sell lowest cost basis. It has potential to be taxed sooner.

I was always curious about how this works. I assume you are using the M1 platform. You are able to choose which exact shares to sell in order to put yourself in the best position for taxes?

This is for my company provided stock which is in fidelity. I’m selling and moving over to M1 :slightly_smiling_face:

Oh cool. So you wouldn’t know for M1 if they have that flexibility 

m1 doesn’t have the flexibility. They automatically select the one with the most efficient tax outcome

```M1’s award winning investment tools enable your money to grow automatically while minimizing the tax burden.```

&gt; m1 doesn’t have the flexibility. They automatically select the one with the most efficient tax outcome
sounds like a dubious claim to me. The best tax outcome might depend on holdings in other accounts or plans that m1 doesn't know about

but the simplicity is worth it for me and the majority of frum families in my opinion, which is why it is my recommendation

With Ally Invest it automatically uses FIFO but you can change it after the fact manually within a certain time period

with more features, comes great responsibility and complexity

m1 doesn’t even expose the concept of shares (another reason its bettter for most families)

but yes, if you want control, you should NOT use m1

most people don’t believe me that Roth IRAs exist, let alone want to learn what a share is

&gt; I’m selling and moving over to M1
Can you not transfer the shares directly so that you don't have a taxable event?

Or is that an effect because of
&gt; m1 doesn’t even expose the concept of shares

i don’t want these tickers, i have enough risk in my employer having my salary tied with them :smile:

i could have done that though if I wanted to keep the shares

It depends on any carry over.  If you're not carrying losses over, I'd try to hold gains until they are long term and sell the biggest loss.

If they are stock in the company you work for, maybe sell all of them?

<https://www.tastylive.com/concepts-strategies>

Growth Stock example
March 29 2024
NVDA stock $903.56
P/E of 75 x the company's current earnings estimate
Which seems to mean that the true P/E  earning estimate is $12.05.

Would one be willing to pay such a premium?
I hope this illustrates why some value "value" stocks over "growth" stocks

That doesn’t explain the appeal of value stocks in any way. Growth has outperformed value for the past 10 years despite ridiculous book-to-market ratios because of their equally ridiculous dividend growth expectations. 

To demonstrate the allure of value you need to demonstrate the value premium over time, prove how that premium is not representative of some kind of yet to be identified risk, and of course show it’s favorable historical correlations with other asset classes. 



Another issue re the P/E ratio: earnings is a financial accounting construct. Financial accounting never really foresaw the idea of a tech company. The FASB is trying, but there is a fundamental difference between a brick &amp; mortar company and a tech company.
As a simple example (I will oversimplify here, for illustrative purposes), in accounting, if I buy a machine that lasts 30 years for $30M, I have $1M of depreciation expense each year that I operate the machine. But if I do $30M of research into a new technology, I will have a $30M expense this year and nothing in the future. So my earnings will be much lower now, but assuming the tech pans out, my earnings will be much higher in the future.

<@U04FE4SPVU0> Can you reword the first have and explain like I am a freshman?

Why can't research (since scientific knowledge becomes outdated) be a depreciating asset? What fundamentally prevents that consideration?

P/E is the market price of a company (observed in the market and generally considered "fair value") over earnings, which is "net income" as calculated using GAAP, which are the rules for generating financial accounting statements. The FASB (accounting standard-setting body) has long held that R&amp;D must be expensed (subtracted from net income) and not capitalized (converted into an asset to be expensed over time). The "why" boils down to a poor matching between dollars spent on research (most of which fails) and revenue generated. Same with advertising. Poor matching.

Accounting depreciation is the spreading of cost into an expense over time, and technically has nothing to do with physical depreciation.
R&amp;D is essentially "depreciated immediately"

Let me know if more clarity is needed. That was a first draft

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I'm Shiurim Shiurim pop up around town lkovod the yom tov

I've noticed this with stock brokerages but I assume this pops up elsewhere too. They ask for your net worth (as part of the onboarding questions, for example), and don't specify whether you should include money in tax advantaged accounts in that number (which makes a nice sized difference of course). Googling whether tax advantaged accounts are included just tells me that "different people define it differently" :shrug:

There is a real definition, and there are casual definitions. Casually for example, or for FI numbers, people don't usually include the worth of their home.

The real definition includes everything. Tax advantaged and all.

But also, you don't need to tell them anything when a website gives you a pop-up of your net worth.

They only ask that info for regulatory purposes. I don't think you even need to answer those questions honestly.

I know they're mainly asking for regulatory purposes, but I do wonder what that purpose is, and whether you can just tell them fantastic numbers.

I wouldn't be surprised if there was an automatic fraud system that would flag something like that, honestly

So <https://frumfinance.slack.com/archives/C04EQ3KAMM1/p1720056424714309?thread_ts=1720056290.941029&amp;cid=C04EQ3KAMM1|you're saying> that unless they exclude something, it means everything

By default net worth means everything. Then there are certain contexts where there are implied exclusions.

My wife has a pension she'll get one day. At any time (after her employment terminates) she can leave the program and pull out all her contributions + interest (which she'd likely never do as she'd miss out on all the benefits of her employer contributions) 

How would we account for this in net worth? Use the contributions+ interest numbers? That's hopefully too small. Use the present value of the expected payout assuming she terminates employment today? That seems impossible to calculate

I looked into it a bit more. It seems like its used to create a risk profile for you and determine which financial products to offer you. If you have a higher net worth they may be willing to offer you margin trading or other riskier investment options.

Blatant lying would be illegal and potentially problematic if you do make use of such financial products and end up owing them money somehow. That being said I wouldn't worry too much about being exact. *The best option would be to call the brokerage and ask them what they're looking for*. But, if the difference is between $100k without tax advantaged and $250k with tax advantaged accounts it almost certainly doesn't matter. Whereas if you're talking about $100k in traditional brokerage accounts vs $2M if you include tax advantaged accounts it might.