A Night at the Retirement Lounge

A guy walked into retirement. At the same time, he walked into a wall.

At a table tucked away in a dark corner, three life long acquaintances looked up from their conversation. They laughed at the misdirected stranger and his inebriated guidance toward financial betterment. The giggles faded as Mr. Exchange, Ms. Investor, and Mr. Government resumed their evening at the lounge.

"It happened last Saturday," Mr. Exchange stated. "As I waited for my dinner bill, I began a conversation with a person sitting at the table next to mine. A few weeks ago, he put in a trade order online to buy additional shares of a position, but accidentally clicked the button to short shares. He did not realize his mistake until the next morning, but by that time the position had fallen ten percent due to a bad earnings report. He thought he had lost a lot of money and would not be able to cover the checks recently drafted on the account. However, it played out to his advantage. You see, to correct the issue, he ended up placing a "buy to cover" order and made money on the error. Within a few days, the position was trading back to its previous highs. This guy concluded that if he made money accidentally, imagine how much he could make if he really put mind power behind the trades."

"That's just silly," commented Ms. Investor. "It's like investments on tap. The ideas keep pouring, but the glass of education and reason never fills."

"Here's the kicker," concluded Mr. Exchange. "He just put down a $5000 deposit for a stock trading seminar in Las Vegas. When he returns from the trip, he plans on quitting his job, liquidating his 401k, and begin trading for a living."

Mr. Government interrupted by asking, "When do you think I'll get my tax dollars?"

"Don't worry," consoled Mr. Exchange. "You'll get your cut soon enough."

Their attention soon turned to a joyful group of novice investors gathered around the dart boards.

"Check out the new investors over there throwing darts at the big board," pointed Mr. Government. "You think they might get lucky and peg a profitable stock?"

"I have never seen them in here before," added Ms. Investor. "They seem overly optimistic to me."

"Watch this," Mr. Exchange instructed. He turned to the novice investors and yelled, "Pardon me, are those horns on your head or are you just too bullish for your own common sense?" The new investors appeared surprised at Mr. Exchange's brazen temperament and turned away in embarrassment. Mr. Exchange often surprised people with his volatile and sometimes irrational behaviors.

Ms. Investor and Mr. Government laughed at their friend's jeering.

"Hey, let's leave this place and go tax something," offered Mr. Government.

"That may be fun for you," replied Mr. Exchange. "But it gets tedious for us."

Ms. Investor turned to Mr. Government and said, "Explain something to me. With my taxable investment account, capital gains and losses are categorized as either long term or short term. If I realize a capital gain in any given year, you'll tax me on the full amount. However, if my realized capital loss exceeds my realized capital gain, I can only use three-thousand dollars of the loss against other income. Also, if my realized loss exceeds three-thousand dollars, I have to carry the loss forward to the next year until it is exhausted."

Mr. Government squirmed in his chair and asked "So what's your point?"

"Well, I want to keep a tax efficient portfolio, but I am having trouble doing so. I just can't comprehend the logic," Ms. Investor stated. "Why just three-thousand dollars? Why not more?"

"Look, you should be happy you're not taxed on the unrealized gains in your portfolio," Mr. Government added.

Interrupting the heated exchange, Mr. Exchange interjected, "Come on you two. If one of you makes money, it means the other has made money."

The investor looked briefly at Mr. Government, shook her head in disbelief, and sipped on her glass of humility.

To lighten the mood, Mr. Exchange said, "Okay, here's a good one. Stop me if you've heard it before. What did the blue chip company ask the tight-wire walker?"

"I don't know," responded Ms. Investor and Mr. Government simultaneously. "What did the blue chip company ask the tight-wire walker?"

"Will you please help me with my balance sheet?"

Ms. Investor and Mr. Government chuckled with forced and insincere laughter.

The lights dim and Ms. Investor looked around the lounge. She observed the patrons. "This place has all types, doesn't it? It does not discriminate. We have the rich and the not so rich. The long-term and the short-term investors. We have fundamental analysts and technical analysts. Investors looking for growth, investors looking for income, and all those in between. Domestic investors, international investors, and global investors. We have broken spirits and spirits raised by good fortune. One person sheds tears of defeat while another cries with happiness. At any given time, we may have aggressive selling or aggressive buying. Yep, this place has something for everyone."

Just then, Mr. Exchange noticed the group of new investors walk from the game room to a nearby table. He resumed his heckling and yelled, "Hey new investors! Are you growing fur on your back or are you just too bearish to stay fully invested?" Once again, Mr. Exchange received positive reinforcement when Ms. Investor and Mr. Government laughed loudly.

The abusive behaviors finally caught the attention of the lounge owner. He approached the three buddies and asked for better manners. Mr. Exchange and Mr. Government laughed louder.

"I'm sorry, I'm sorry," Mr. Exchange sarcastically apologized. "How's about sending them a bottle of intoxicating gains, on me."

"And send them a tax burden on me!" added Mr. Government.

The lounge owner turned to Ms. Investor and asked, "Why do you associate with these two guys?"

Ms. Investor looked up with a slight frown and answered, "I cannot figure my retirement without them."

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