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Take the Money and Run, or Let it Ride? What Should I Do With My Stock Gains?

by Debt Destroyer on June 14, 2009

Picking stocks is so easy, a baby can do it.

Some of you long time readers might remember that back in February, I decided to take my student loan and try to time the market by investing in a hand-full of well known companies whose stocks were very low.

Here’s what I got(2-25-09):

  • FORD – 100 shares @ $2.04
  • CITIBANK – 100 shares @ $2.66
  • JP MORGAN –  20 shares @ $21.13
  • GE – 15 shares @ $7.07

These were not rock bottom prices.  In fact the market took a HUGE tumble right after I got in (Citibank went down to $1.03).  Oh well that how these things go.  But since then the market has recovered nicely.

As of this writing (6-01-09) here is where these stand:

  • FORD – $6.13   (+ 199%)
  • CITIBANK – $3.69   (+ 38%)
  • JP Morgan – $36.11 (+71%)
  • GE –  $13.86 (+ 96%)

In a little more than three months I turned my $1000 into $1900.

My personal trading account is my fun money.  Over the years I used it to help with down payments for our first house and our van.  I also tapped it to buy our first Mac (6 years ago, using it to write this post).

I realize that there will be a short term capital gain tax, but I don’t sweat those.  To me taxes just mean I made money.  Plus I don’t think I’ll have to worry too much about taxes this year(full time student, kids, high medical expenses).

So, what to do?

As I’ve mentioned before, we use a Wish List to keep track of long term wants.  And one item in particular is starting to look very enticing.

  • A Trip to NYC

We’ve been wanting to go for a couple of years now.  But timing, relatively low airfares, and these recent stock gains might finally push us over the edge and actually get us there.

While there we plan on catching the US Open, the Late Show, a Yankee Game, and all the other usual touristy stuff(Broadway, Museums, Famous Landmarks).

I realize that you Dave Ramsey fans out there won’t be too pleased with the vacation option.  Here’s what his recent newsletter said about the subject

Waaaahhhh! I didn’t go on vacation for two years while I was cleaning up my mess. Listen, your life has been a trip to the beach. Now it’s time to clean up your mess! I’m not saying that you should never go on a vacation. Just don’t go when you’re $20,000 in debt! Suck it up and live like no one else now so later you can live like no one else. That’s what I did. Now I can go to the beach any time I want! You’ve got to break this cycle in your head that you deserve stuff. None of us deserve squat.

So do I take the money and head to the big apple?  Or do I let it ride and really let it accumulate?

I guess I could also use it for something responsible like tuition or for the A/C repair in our van, but where’s the adventure in that?

:)

Until next time,

-DD

{ 7 comments… read them below or add one }

Paul Was June 15, 2009 at 12:05 pm

I did the same thing, and I’ll probably do it if the market tumbles big time again.

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Discover June 15, 2009 at 12:28 pm

I would cash out. Bank stock are overvalued due to accounting rules. Option Arm loans (Chase bought Washington Mutual and is exposed to this) are going to be an increasing problem starting this year and as it is now the banks are not even foreclosing on all the people not paying their mortgage because the housing market would not be able to handle all that supply.

Not sure about Ford, but that is a very nice gain for a company losing billions in an economy showing signs of an L-shaped and jobless recovery.

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Car Insurance Phi June 17, 2009 at 7:31 pm

I’m in agreement with Discover – banks are overvalued thanks to shady accounting. Get out. Once commercial defaults rise and even prime mortgages start defaulting, game over.

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Debt Destroyer June 18, 2009 at 10:58 am

Thanks for the comments.

What I normally do when I get such quick gains, is sell enough to get my initial investment back and then let the rest ride it out for a while.

If we don’t NEED the money that’s what I’ll probably end up doing this time too.

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celticbuffy June 18, 2009 at 11:59 am

Being the adventurous sort that I am, I say take the money and head for the Big Apple. You only live once and I know you’ve been wanting to go for a very long time!

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Hiro June 21, 2009 at 1:39 am

Simply said, I would take profits now. It’s time for the market to slow down a bit and pull back.

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Jonathan@Friends&Money July 2, 2009 at 4:28 pm

personally i’d let it ride, the market has a long long way to climb, and if you can afford to wait i would.

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