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Ray Merola  

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  • Union Pacific: How To Trade Around A Core Position [View article]
    Hello Diogenes

    Like so many Rules, there's no "right" answer for everyone. However, my view is taking some hard profits on an overvalued stock is just prudent. I'd prefer to place the resultant cash into another undervalued security, whether it be the same stock after a pullback to fair value or below; or another investment altogether.

    "Round tripping" a gain stinks. Take a little off the table, and enjoy it. Gotta pay some tax? In the long run, I've found paying taxes preferable to stubbornly holding onto a big gain until it's diminished or lost.

    If one believes a security is overvalued, what would make one think it will always remain so? Investing is largely about probabilities; that just doesn't sound like a good long-term approach to me.
    May 20, 2015. 07:45 AM | 2 Likes Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    Thank you for sharing the link, T4Y

    DRIPs are an excellent way to compound dividends and often avoid any transaction fees. Smart!
    May 20, 2015. 07:37 AM | Likes Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    You are most welcome, HU4ROLLZ

    Indeed, buying in increments pays off time and time again. What if we buy a 1/3 position and the stock goes straight up? A high-grade problem, to say the least.
    May 20, 2015. 07:35 AM | Likes Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    Thanks for reading, jess

    While I can't provide tax advice, I have a couple of general ideas.

    I assume the gains are in a taxable account.

    From time-to-time, I have been in a similar circumstance. My view is, "don't fear the tax man." Manage your portfolio prudently, taxes are not the primary consideration; having to pay some tax on enormous gains is a high-grade problem. I won't jeopardize frittering away a big profit over worries that I have to pay CG taxes. "Round tripping" a nice gain on a market correction is worse than paying the tax.

    Second, it appears the gains are long-term. Today, the max rate is 15% (unless one is at the surtax level). That's manageable. I can recall times when our friends in Washington have jacked up those rates. CG rates are lower now than times past, and there's nothing guaranteeing it.

    I seek to be tax-efficient, but it's not an override v. good portfolio management.
    May 20, 2015. 07:32 AM | 1 Like Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    Glad you stopped by and commented, DAG

    Other contributors and commentators help me to think about the concepts, too. Oftentimes, I see new points of view. S.A. is a unique and powerful platform for exchanging ideas.

    All the best to you....
    May 19, 2015. 09:58 PM | 2 Likes Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    Touche, Amerlafrance

    I can only hang my hat on the ~ in the previous comment! Your math is entirely accurate.
    May 19, 2015. 09:53 PM | 1 Like Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    copper15

    In a nutshell, I suggest an investor consider selling part of his/her stake after it appreciates 25%. Harvest some of the gain. I generally think about selling ~25% of the position, since this leaves me with the same dollar amount invested as when I filled the position initially.

    If the investment thesis remains intact, then the investor may chose to buy back the shares. However, I typically will not enact a re-purchase unless I can do so for at least 5-10% less than the sale price. The pullback permits me to regain the position, but at a discount, and covers taxes (if any).
    May 19, 2015. 07:13 PM | 1 Like Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    Appreciate these remarks, GA

    We all change and adjust (hopefully) as we age; blending time and experience.
    May 19, 2015. 07:00 PM | Likes Like |Link to Comment
  • Buck The Traders: United Rentals On Sale Now [View article]
    MmMO

    I can offer a few thoughts.

    United Rentals' customer book is composed of 51% Industrial and 46% Non-Residential users. Residential customers represent only about 4% of the business. So the housing start data wasn't likely to move the needle much.

    Today, URI appears down with other Industrials and Energy stocks. This doesn't make sense to me, and is part of my investment thesis. Disconnects provide opportunities. However, in the short-term, United Rentals stock has tracked companies like Caterpillar and Marathon. Check it out on the charts. Seems silly.

    That's a lead to the last comment I have to offer: in the short-term, Mr. Market is often irrational and foolish. He over-and under-values stocks; often for the wrong reasons. However, over time, clarity usually prevails. Well-managed companies that generate increasing earnings and cash find prices follow along.

    If you like URI, and have a sound investment thesis for owning it, then I'd watch corporate fundamentals, earnings reports, management presentations, and SEC filings to ensure the thesis is intact. If so, then we just wait for Mr. Market to eventually reward good business performance.

    Hope that helps.....even a little.
    May 19, 2015. 12:58 PM | Likes Like |Link to Comment
  • Can Annaly Capital Management Sustain The Dividend? [View article]
    CWM

    Thanks for another excellent read on Annaly Capital Management. I appreciate your thorough research and analysis.

    FWIW, I contacted Vanguard Investments today. I sent an email to their Portfolio Management group with links to my recent NLY article, and yours; outlining concern over shareholder/management mis-alignment, and requesting the Vanguard shareholder provide their position.

    Given the confusion with my request, I am not sure what kind of reply I'll get. Evidently, they don't get many investors who ask questions about the portfolio composition and governance matters.
    May 18, 2015. 08:31 PM | 7 Likes Like |Link to Comment
  • Is Annaly Capital's Management The Solution Or The Problem? [View article]
    SkiDad13

    Shareholders are notoriously passive. Casting your ballot, thereby reflecting your views at the AGM is the single most constructive thing many of us can do.

    Annaly stockholders are split about 50/50 between institutions and individuals.
    May 18, 2015. 11:29 AM | Likes Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    Thank you, Piptief, for the very kind words. Much appreciated.
    May 18, 2015. 07:35 AM | Likes Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    Great color commentary on your original remarks, awayk

    Thanks for sharing with us. Certainly something to think about, as markets are ripe with "animal instincts," emotion and intuitive thinkers.

    I believe traders rely more on intuitive (clinical) thinking; while investors tend to be more analytical (actuarial). However, I suspect very few of us are black-and-white one way or the other.
    May 17, 2015. 11:17 PM | 1 Like Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    I agree. Some people just seem naturally more intuitive; others in certain areas.
    May 17, 2015. 11:13 PM | 1 Like Like |Link to Comment
  • Union Pacific: How To Trade Around A Core Position [View article]
    rmendpara

    It is a steal.

    These full-service $30 to $60 commissions were the only game in town. In addition, there were "odd lot differentials," and prices were in 1/8 increments, not pennies. The entire playing field seemed tilted against the small investor.

    During that period, I generally utilized mutual funds. Stocks were just too difficult to buy and sell, especially since I was young and had little capital.

    There were only a few index funds, and no ETFs.

    Times have certainly changed for the better.
    May 17, 2015. 11:12 PM | 1 Like Like |Link to Comment
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