Look for the Industry Leaders When Buying Stocks

Last week our assignment was to create a list of companies we might be willing to invest in.  This week my column discusses a key criteria to analyze in those companies when determining where to invest.  See my regular Wednesday column in The Arizona Republic. 

Debut of my new column in The Arizona Republic

My new column in The Arizona Republic debuted today.  The column is an investing column for women and is entitled:  “Your Investing IQ.”  The research shows that 90% of women will–at some point in their life–be responsible for the family finances.  Yet most women also say they are not confident in their financial decision-making.  We are going to work on improving our financial knowledge.  Together.

So check out my new column.  And feel free to comment or write with questions:  nancy.tengler@cox.net.

http://www.azcentral.com/story/money/business/2014/04/01/investing-takes-discipline-patience/7182259/

Back on Track–Upcoming Book is in Production

Dear Friends,

So, The Women’s Guide to Successful Investing is in production.  Release date is August, 19th but you can pre-order now at Amazon: The Women’s Guide to Successful Investing.

I am pleased with the accessibility and practicality of The Women’s Guide.  The Foreword penned by Jacki Zehner–Goldman Sachs’ first female partner and a generous philanthropist emphasizes the importance of women improving our financial knowledge.  Whether you choose to manage your own assets or hire someone to do so, knowledge and improved understanding of the markets will make you wiser and more inclined to grow your wealth to meet future financial goals.

Tengler Cover

My weekly column in The Arizona Republic–”Your Financial IQ”–for women is relaunching on April 2nd in an expanded format and visibility. I will be re-posting those articles here in addition to other pieces I write.

So stay tuned and please invite your friends to follow.

A Word About Tax Strategy

The market is up over 25% this year and even if you didn’t generate those kind of returns in your portfolio, you likely have some gains in the stocks and ETFs you hold.  You may be wondering if you should hold on to these investments or take your profits?  It is a good question since the market has had quite a run.  But in addition to considering the potential future appreciation your investments may or may not achieve, you will also want to consider the tax implications of selling your winners.  

It is important for you to know that when you take investment gains they are subject to the prevailing tax rules.  As of the end of 2013 the taxable rate for long-term capital gains ranged from zero to 20% depending on your tax bracket.  Short-term capital gains are taxed at your income tax rate.  So tax planning is critical to enhancing your long-term total return.  If you are investing in a 529 college plan or an IRA you don’t have to worry about taxes.  All gains (and losses) are tax exempt.  You don’t pay taxes on those funds until you begin to withdraw them and they are treated as income in the year(s) you do so.  So breathe easy about college and retirement accounts.  You will be able to maximize your total return in a tax-free environment (which, after all makes sense since you have already paid taxes on the acquisition of that money via income tax when you earned it in the first place).  Your savings account/ portfolio is another story.  In this case, though you’ve paid income taxes on the acquisition of this money as well, you will have to pay again if you generate gains.  But you can offset those gains against any losses you’ve realized.  And you can work to ensure all your gains are taxed at the lower, long-term rate (for stocks you’ve held over 12 months).

The rules for tax harvesting, as it is called, require that you may not buy any security you are selling for tax purposes for over thirty days before or after the sale of the security.  This is important because you may have a holding you like for the long-term but have a loss in for the short-term.  Selling that stock in order to realize the loss does not preclude you from buying it back.  But you must wait thirty days plus one.

Your discount brokerage platform will keep track of your unrealized as well as realized gains and losses.  Discount brokers keep track of what are called your tax lots.  Tax lots represent the increments in which you buy and sell securities.  Each trade is logged in as a tax lot and the broker keeps a schedule of how much you paid for that particular stock and when you purchased it.  Additionally you can view an up to date realized gain and loss schedule to assess your tax liability at any time during the year. The schedule will break your gains and losses into long and short-term segments–again providing valuable insight as you determine what, if any, year-end trades you may want to execute.   And for planning purposes you can review your unrealized gains and losses at any time during the year.  

I am not suggesting that you should hold onto stocks or ETFs simply to avoid generating taxable gains.  Taxes should not dictate your investment strategy.  I am simply suggesting that you should be aware when you create a tax liability so you can set aside funds to pay the taxes or find a corresponding loss you can realize to minimize your tax liability.

I trust you had a successful year of investing and look forward to sharing more ideas in 2014.

Why I am Bullish on Stocks Despite the Government Shutdown

Call it American exceptionalism.  Call it the indomitable spirit of capitalistic innovation. Call it whatever you like.  America’s energy production is surging thanks to new technologies for extracting oil.  Hydraulic fracturing (fracking as it is often referred to) has allowed US companies to access shale-rock formations of oil and natural gas that were not fathomed as recent as a decade ago.

The Wall Street Journal posted a front-page headline today that said:  “U.S. Rises to No. 1 Energy Producer.”  Overtaking Russia as the largest producer of oil and natural gas in the world.

Our energy advantage is making American companies more competitive around the globe.  So much so that manufacturers are beginning to move facilities back onto U.S. soil.  This is the kind of macro trend that will eventually rise above the noise of government shutdowns and poor government policies and drive growth for company earnings…in spite of Washington.

I am not advocating that stocks will rise tomorrow but they will over the long-term.  Recently the head of a major European company told The Wall Street Journal he hadn’t seen this kind of economic and competitive advantage available to any company during his entire career.  This energy advantage is going to make U.S. companies very hard to compete with he concluded.

You should always buy stocks for the long-term.  If you have a shorter time horizon this may not be the time for you to invest.  But with the market fretting over government shutdown and default now may be a good time to pick away at some of your best ideas.