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same thing with the tech bubble.
Knew a guy that had been told by his tax accountant brother that he needed to hold onto his stock in Veritas for at least a year after he exercised his options (so he could pay long term capital gains).
His option price (strike price) was $16/share... at the time he optioned it, it was at $85/share (or a gain of about $70 per share, which if he optioned and sold on the same day, he would have had to pay about $26 per share in taxes at the regular income rate... he would have netted about $45/share on 20,000 shares... or $900,000 AFTER TAXES!).
But greed got to him. He didn't want to pay 36 percent cap gains, he wanted to pay 15 percent long term... so he bought the shares and held on. Stock went to $75 and he sweated... but didn't sell, then it went to $60 and he didn't sell... then to $50, then $40, then $30... and it was at $15/share (under what he paid) when he finally sold... not only losing the $900,000 but having to PAY $20,000... but at least he didn't owe anything on the taxes!!!
I kept telling him to sell and pay the taxes... lock in his gain, but NOOOO... I was the dummy. He knew it would come back if just waited a little longer...
That's where we are at in the housing bubble now. Prices are starting to deflate so rapidly that like a deer in the headlights, the greedy homeowners who had ALL THAT paper equity wealth are now stuck. And too depressed to realize that they will be stuck WORSE if they don't do something.
Hence the turn down of the $640K offer last year and now the sale at what, like near the purchase price if they are lucky so they can skedaddle out of California.
Sigh.
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