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Started By
Message
Stock formula question
Posted on 7/8/10 at 11:38 pm
Posted on 7/8/10 at 11:38 pm
I am trying to figure out a formula for knowing when to sell a position after I have reached a particular percentage gain, taking transaction costs and capital gains taxes into account...but so far I have been unsuccessful (and google hasn't helped). I was hoping the MB could rescue me
A simple example:
Say I paid $25/share for 10 shares of XYZ. It cost me $5 to buy and will cost me $5 to sell. My capital gains tax bracket is 25%.
At what price will I be able to sell and realize a 10% gain free and clear? Is there a popular formula for this? If the answer is "it depends," I would even appreciate something to get me close to the right answer
Thanks
A simple example:
Say I paid $25/share for 10 shares of XYZ. It cost me $5 to buy and will cost me $5 to sell. My capital gains tax bracket is 25%.
At what price will I be able to sell and realize a 10% gain free and clear? Is there a popular formula for this? If the answer is "it depends," I would even appreciate something to get me close to the right answer
Thanks
4
Posted on 7/9/10 at 12:20 am to Feed Me Popeyes
10%= (sold price-purchase price-10)*.75
Posted on 7/9/10 at 12:21 am to Feed Me Popeyes
quote:
My capital gains tax bracket is 25%.
Sounds like a homework problem.
You bought $250 worth of stock, and want a $25 gain free and clear.
1 / (1 - .25) = 4/3
So you need $33.33 (= $25 x 4/3) in taxable CG to end up with a post-tax profit of $25.
Add in the $10 in fees and I think you need to sell at $293.33 = $29.33 per share--so a 17.3% rise in the market price is necessary for you to clear 10%.
Posted on 7/9/10 at 12:26 am to LSUtoOmaha
quote:
10%=
Correct if you mean... "purchase price*.10 ="
Posted on 7/9/10 at 6:10 am to Feed Me Popeyes
thanks guys...I was struggling with that for too long. My brain is mush when I get home from work
Posted on 7/9/10 at 6:28 pm to Feed Me Popeyes
i don't think you should be buying stock if you can't figure this out.
Posted on 7/9/10 at 6:33 pm to BRTiger2005
shut the hell up
Posted on 7/9/10 at 6:49 pm to Feed Me Popeyes
quote:
shut the hell up
Posted on 7/10/10 at 9:32 am to BRTiger2005
quote:
i don't think you should be buying stock if you can't figure this out.
He'll be calculating massive "gains" just like the Beardstown Ladies did and eventually find he was losing money the entire time after someone shows him the correct math.
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