Thursday, December 14, 2006

Have A stock? Got Answers

Are you watching something you want opinion on. Shoot!We are glad to give attraction points. TELL FRIENDS/WORLD, WEEKEND NO PROBLEM. Guys/Girls, Keep asking, there are more than 10000 stocks ETFS etc. Remember "Do not fear, Boris is Here"My answers expire! Dec 31 2006. Need refresh come back 2007. Note, we have opinion on every stock YAHOO can download. You will never hear from "NO OPINION", like this CNBC joker. Know why? Cause our method is scientific, We do not make up as we go, do not speak to CEOs(will never be sued/taken to jail), we can not even speak ENGLISH ( but speak 5+understand 9 - not including computer languages). So bring orphans have-nots we will cover any stock, even Stocks not on ESIGNAL .No stocks, let us discuss anything, Geopolitics, Economy whatever... Good Trading

13 comments:

jebuskrite said...

Hi Boris,

Here's another stock (AXA.ax) I'm following that recently broke out. How would you play it?

boris said...

Dear Jebuskrite,
This stock is a good selection, again! It is at a wall of 6.91(a bit past) if it does not stop you can expect, 7.7 and if not stopped it can go to 9.0 or 9.5. Use the best trailing rules you can master ( 4 day low will be a good start ) and let it ride. May want to take partial profits. 1/3 now, 1/3 7.7 and let the rest hang out.
Good to hear from you.
Good Trading.

jebuskrite said...

lol, I'd be surprised if it can reach 7.7 anytime soon. I'm only thinking 7.4~ish. I'll probably exit there and look to reenter lower.

For me, it isn't really worth taking partial profits because each transaction costs $20 (ie. $20 to buy and $20 again to sell). By the way, how much are your transaction costs in your country?

cobbense said...

As for US nat. gas, how about:
CHK (should_be_a_winner_but??)
XTO (winner?)
XEC(looks_good_on_paper_but_looser?)
?

From other post farther down long ago somewhere, about CEFs & MLPs:

When you buy a CEF (like KYE) that buys some MLPs (like KMP), then the CEF does the IRS tax reporting heavy lifting, and you get a simple normal dividend. Even an IRA has to pay taxes if it receives too much income from MLPs, complicated tax situation which I do not even wish to try to understand.

Don't know what you may already know or (not) want to know about all this?

Regards,

boris said...

Dear Cobbense,
I do not know too much about accounting ( not really, I pay I know some), but do not view it as a factor in my investmetns. I would buy KMP, dividend or not, if I see it moves.
About KYE, looks good, could go to 28 or so. Perhaps even higher. I am very careful about any stocks even energy. The reason is that Market is too high and speculative and when the big boys start selling they will sell ALL, including energy. Nevertheless, being in the inflationary era, Energy should do well in 2-4 year period.
CHK will perhaps dive a bit early next year and find a support... I will tell you where, next year.
XTO seems to have opposite path ( hith 56?)
XEC nice bounce from 31 or so and could take either path next year.
I still think there is possibility of NAtural gas to make high in mid 2007, with or without geo blow-up.
Thanks for Tax info.
If you have reference, will be appreciated
Good Trading

boris said...

Dear Jebuskrite,
I trade under $2 for a turn in stocks. Soemtimes even less. Volume... is the name of the game. Even with your $20 rountdrip? you could, I hope, increase your trade size and make it profitable to have staged entry/exit policies. To me this is very helpful. Does not have to do it, of course. &.4 is OK too on AXA, but it could go higher, if world keeps inflating.
Good Trading

boris said...

Dear Jebuskrite,
I meant 7.4 is ok for AXA.
Good Trading

cobbense said...

Remember, an MLP "unit" is not a stock.
Yoy buy one, you become a limited partner.
That is the simple explanation.
The potential tax-convolutions are simply mindboggling.
You would have to consult the IRS site &/or a tax lawyer for details.
This is from a 44 page Wachovia "MLP primer":


What Are The Tax Advantages For The Limited Partner Unitholder (The Investor)?
Due to the MLP structure, LPs typically receive a tax shield equivalent to (in most cases) 80-90% of their
cash distributions in a given year. Thus, an investor typically pays income taxes roughly equal to 10-20% of
his/her distribution. The tax-deferred portion of the distribution is not taxable until the unitholder sells the
security. This is how it works:
(1) LP unit holders receive quarterly cash distributions from the partnership each year. Distributions reduce
the unitholder’s original basis in his/her units. The unitholder pays capital gains taxes as well as ordinary
income tax on deferred income when he/she sells the security.
(2) Net income from the partnership is allocated each year to unitholders, who are then required to pay tax
on his/her share of allocated net income regardless of whether they receive distributions. In general,
distributions are well in excess of any tax liability. However, the unitholder is also allocated a share of
the MLP's deductions (such as depreciation and amortization), losses, and tax credits. These deductions
often offset a majority of the allocated income, thereby reducing the amount of current taxable income.
Taxes are not paid on the portion of allocated income that is shielded by deductions until the investor
sells the security. This is the tax-deferral benefit of owning a MLP. When the investor sells the security,
there is a recapture of the deductions (depreciation, etc.), meaning the income that was deferred by the
deductions becomes taxable income and is taxed as ordinary income.
An investor's tax basis is adjusted downward by distributions and allocation of deductions (such as
depreciation) and losses, and upward by the allocation of income. The net effect (i.e., the difference between
cash distributions and allocated taxable income) creates a tax deferral for the investor. When the units are
sold, a portion of the gain is paid at the capital gains rate and a portion of the gain (resulting from the tax
shield created by allocated deductions) is taxed at the ordinary income tax rate.
While this all may seem a bit confusing, the bottom line is this: in any given year, an investor will
typically only pay ordinary income tax equal to 10-20% of cash distributions received. The remaining
80-90% is deferred until the investor sells the security.

boris said...

Dear Cobbense, Excellent explanations to our readers of what they need to look at for tax purposes when MLP's are held. Thanks a lot for enlightening us on this pretty arcane tax machination. I have admitted, I have not worked with MLP's before and do not have horoizons long enough to hold them. I buy them to make money trading. As soon as I have more made than the income would give me for a 6 or more months, I sell them. Nevetheless there will be those who keep them. So let us be greateful for this info.
Good Trading

cobbense said...

Boris,

Your welcome, some longterm investors do not seem to realize what they have bought when they bought an MLP.

Nota bene, correctly managed, MLPs can give some major tax advantages, especially wre to inheritance, as I understand it. An underappreciated group in general, Wachovia believes.

I am curious as to why you previously recommendeded long term investors to have their assets only in cash, gold, and some "pipelines"?

Why just pipelines, of all things? Ok, I have some in an IRA and am satisfied with them, but there are other things also . . .

boris said...

Dear Cobbense,
Here is why the pipelines. This is a really, really quiet business that just "delivers". Think about it... Can you imagine a compatition in this field, I doubt these pipelines compete much. They have monopolistic maps they cover and that is it. Anybody needing the staff must deliver via them. Very difficult business to enter. Lot of infrastructure, requiring approvals etc. Gas is forever in the natural or reproduced from coal. So what is not to like? I could be missing something, but then again, I do not know, what I am missing.
Good Trading

cobbense said...

Boris,

AH! so you are really a longterm investor maskerading as a short term trader . . . ;-)

Joking aside, piplines in MLP form are likely one of the better long term buys right now.

But you found the potential nail in the coffin of all natural monopolies - the always present possibility for regulation to death.

This happened to all the utilities some now many years ago on a national level (owning utility companies back then was a real downer), and more recently was partly responsible for California's power outage problems (aside from Enron's market manipulations). It was just not profitable to invest in or run electrical utilities then, so noone did.

So al long as MLPs are a tax-favored form, and the regulators don't kill them in some other fashion, the yshould be quite nice to own, though probably not so good for short term trading.

Regards,

boris said...

Dear Cobbense,
Of course, there is a large part of my portfolio that is magaed on a long term bases. Even though there too, I will often kick stock out if I made enough money.
Well, you are so right about regulated companies. HOW ABOUT THE TRUSTS????!!!!, Stupid Canadian Officials...
In any case, I keep 10% of my money for speculation and rest is "resting"
Thanks and Come again
Good Trading