Sunday Funnies 2.0: Cramer does make it more interesting - I guess

On Friday June 1, 2007 Jon Ogg reported Cramer's sell block: Sell Charter and Apple - Yes sell Apple Inc (AAPL). Why? It's now a trading stock. He thinks you should sell right before the iPhone comes out, wait for a dip, and then buy it back. This is very stupid advice on many levels...or at least very funny for those with a sense of humor.

First, one must look at the tax implications of selling Apple and buying it back. It could end up that you will lose money if you have to pay taxes on short term gains. And those of us in California and other States with high taxes would still pay around 22.5% on long term gains. Therefore, if Cramer sees an opportunity to trade out and back in, it better leave room for making up the taxes and fees. How big a swing does Cramer envision? It would have to be 30% for the long term guys and maybe 40% for the short term investors to make this trade worth while. This is all highly speculative and no amount of homework will give you the answers you seek.

Second, what if Cramer is wrong and the stock does not dip or it only goes down 10% followed by a lateral period and then more upward movement? Then what do you do? Now you are playing a guessing game with a high probability of guessing wrong, and you will be unhappy you got left behind and paid the taxes too.

In fairness to Cramer, I happen to agree that it might be time to take something off the table and book some profits. However, it might be wiser to take those profits and put them into a better value, diversify and protect your earnings rather than try and get back into Apple again. There are plenty of wise investors that have been seeing some fluff in Apples current stock price and have been advising the same thing. Sell some, keep some, and limit the speculation.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.