Hi Macca
The hardest thing to do when your investing is knowing when to sell some into a flash rise, if you get so lucky. So easy to say so in hindsight,
If you want to see a flash rise there is one going on with Tesla right now. See chart below.
Notice that the TSLA share price low was 138.80 In Apr. Lets say you bought 200 shares at 145 around that time costing $29,000
By late Oct the SP gets to 265. But that's back to roughly around the same levels it was in the second half of 2023.
That's just in a building phase. You have made $24,000 profit on a $29,000 investment in 6 months. Have you taken anything off the table as yet? Lets assume not, so at this stage let's ignore CGT.
The flash rise begins at roughly 265.
* 4 weeks into the flash rise and the SP reaches 360. Your 145 investment is now making 215 profit for each share, so about $43,000 profit before tax..
If your share purchase was through a platform where profits are eligible for CGT. You have no long term 50% CGT discount and if your marginal tax rate is 30% then that profit after tax is $30,000. $13,000 CGT on a $29,000 investment. If your marginal tax rate was $120,000 then that will force your into the higher tax bracket of 37% CGT so even higher tax. Have you sold any yet?
* 7 weeks into the flash rise the SP reaches 460. So $63,000 profit before tax. Your into that 37% tax bracket so $23,300 CGT leaving you with $40,000 profit.
Consider this you are nearing that 45% tax bracket so any further profit above $70,000 will be taxed at 45%. If your double your first theoretical investment to $58,000 (not such a large investment in super these days), that's $124,000 paper profit, then you have already reached well into that that 45% tax bracket.
Is it decision time yet? Your currently sitting on $63,000 profit and if that investment is eligible for CGT that leaves you with $40,000.
It rose since the flash rise started at 265 by 195 in 7 weeks. Since your buy in April at 145, by 315.
Is it over yet? Who Knows? You would look a goose if you sold everything at 360
If you hold until 12 months after you bought to Apr 2025 your CGT 50% discount cuts in, so less tax and possibly a lower tax bracket. Does this influence your decision? We are talking about very serious money attached to this decision.
These sort of flash rises are crazy. This is not some form of tin pot little company this is Tesla.
This was exactly the sort of dilemma I faced with BRN during it's crazy flash rise. However I have seen many of these crazy flash rises before, Poseidon, the Rundle oil shale boom, the 1986/87 boom and crash, the Dotcom boom and crash, and GFC 2007/2008. Experience and following the charts showed me that you have the let it run and look for the exit signals. You are dreaming if you think you can pick the exact highs or even near them. That's fiction, just look for various charting warnings signalling the approaching raging bear. These occur in the early stages on the way down from the peak.
So, my initial 6.6 cents purchase was eligible for CGT although I had been holding for more than 12 Months so eligible for that 50% CGT discount.
I was watching intently during the last days of that flash rise. only just 13 days. remember my shares cost 6.6 cents and I let it run.
Day 1 Close 68
Day 4 close 88
Day 8 close 1.19
Day 9 Low 1.22 to high 1.42 (a 20c range in 1 day and my shares cost 6.6c it had gone really crazy)
Day 10 I got in to commsec just after opening 10am. I went through the procedure of placing a bid at 1.55, just theoretical I did not place the sell order, but by the time I refreshed the screen the last sale was 1.60. the range for that day was 1.47-1.87
Day 11 1.33 - 1.57 the first pullback since day 1.
Day 12 1.46- 1.86 it had resumed its run upwards. Closed at 1.86
Day 13 Then it went berserk, it had closed at 1.86 the day before and opened at 2.10, that's a 24c rise between closing and opening and then rose to 2.34 to the absolute peak so from 1.86 close to peak at 2.34 ( that 48 cents). Some fool paid 2.34 overtaken my FOMO. closed at 2.13
Day 18 reached a low of 1.33 so from the peak of 2.34 to 1.33 low that day a 43% decline all in 5 days.
Then the Flash DCB began I set my 15% sell order at just before the 50% FIB B-wave bounce of that decline.
Day 22 low 1.74-1.89 going past the 50% FIB and approaching the 61% FIB bounce. My sell order got done.
It only took 24 TD's to get to 1.00 the rest is history.
People looking at this schedule will say you fool why didn't you sell at 2.00. it was there for only there for 2 days and no one rings a bell announcing that this is the peak. I could have sold at 1.00 just before day 8 and they would be saying you goose why did you sell at that price. Hindsight?
Much of the volume during these crazy flash rise period were day traders who were all over it. My guess as to how many long shareholders actually sold some during this period is about 15%. When the SP got to 2.34 punters were calling for 3.00 easy and maybe 4.00.
I was in my early teens when Poseidon boom happened and my older brother was in the markets and got me to buy the daily paper for the share prices.
When Poseidon got to $20 it was all over the papers. The rest of the market was affected as well with everything booming, FOMO took hold. Insanely it got to $50 and then too $100. There was and afternoon paper that run a competition for 2 Poseidon shares worth $200 I was working 11 hours a week washing bottles and counting pill into them for 37 cent and hour.
Does the story end there? No Poseidon got to $200 per share. then everything went belly up. So BRN insanely got to 2.34 why not 4.68?
Sorry for waffling on for so long but I was up before the sun this morning, went for a walk and started to think about and write this post.
So for my critics what would you do today if you bought 200 Tesla shares at 145 in April and the SP is currently $463.
Yes, I realise that Tesla is listed in the US on the Nasdaq, but with the right trading platform you can buy them from Australia. I follow some charts international stocks and it was a perfect example of a current Flash rise.
DYOR
Cheers Lies
PS sorry about the various mistakes in this post, but it has been a long time in the making and I am not going to review it.
(20min delay)