Wednesday, January 15, 2014

First MFI Rule Breaking

I broke an MFI rule for the first time since I re-booted my MFI investments in August of 2012. I sold NUS today at 116.59, 12 trading days early. They are trading off 17% today on a report in a Chinese newspaper which suggests they are a pyramid scheme and may be breaking Chinese laws. I have worried about such a story breaking for many months with NUS. If it had been a piece by someone shorting the stock, I think I would have held the final 12 days, but a newspaper article seems more onimous.  Anyway, I have sold and still managed to pocket a very substantial 181% gain in under a year. I will have to pay ST capital gains taxes, which I hate.

Remarkably, even with the NUS flame out, I am up for the day. That is the advantage of NUS only being 3.4% of my total portfolio.

Now that the day is done, I am mini-regretting my early sale.  The math goes like this:  I bought them at $41. I sold at $116.  That is a $75 gain per share.  At a 40% tax rate, my final gain per share is $45.  At a 20% tax rate (the LT rate), my after tax gain would have been $60.  So, unless NUS drops below $101 ($116 - ($60 - $45)), after tax I would have been better off to wait the final 12 days.  Oh well, what is done is done.  We all have moments of weakness and let our emotions win (though I am pretty sure that was one of my resolutions).

Still spending a lot of energy thinking about my February 2014 tranche.  Here is list of candidates:

I will likely lean towards larger cap stocks.  So CSCO, SNDK, COH, ATVI and NSR is certainly a likely combination. ALLE is interesting, they are a spin off from IR back in December. I am still trying to decide if they qualify.

1 comment:

Paul T said...

Good call. Down another 22% so far today.