SmorgasBoard

[Davinci001]

Hello all,

My grandmother has about 66 shares of Prudential stock that she is thinking about selling.  I have been watching it for the last few weeks and it has basically stayed between 70 & 80 a share.

My questions is, should I sell it for her or hold on to it?

Any info would be appreciated.  Thanks

[cheddar]

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Davinci001 wrote:

Hello all,

My grandmother has about 66 shares of Prudential stock that she is thinking about selling.  I have been watching it for the last few weeks and it has basically stayed between 70 & 80 a share.

My questions is, should I sell it for her or hold on to it?

Any info would be appreciated.  Thanks

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What it has done in the last few weeks is irrelevant to the question of whether to sell it.

Couple of questions to think about, though:

1) What kind of account is this in?  Tax-advantaged or taxable?

2) If taxable, what is her cost basis and how long has she held the shares (to determine potential tax liability)?

3) What portion of her total portfolio does this investment represent?  Is she well diversified in her other investments?

4) What sort of transaction costs (commissions) would be involved in selling?

5) Does she need the money right now?

Message Edited by cheddar on 05-02-2008 07:57 AM

[Davinci001]

These shares are in a basic ESPP account (Computershare i think.. though she is not an employee.. she was given these shares by Prudential for having her insurance for basically all her life).  She is on a fixed income and the money could help her out, but she doesn't NEED the money per say.  She has had the shares since 2001.  She doesnt own any other stocks and doesn't know what a portfolio is.. lol.  As far as the costs, i think it is a 1 time 35.00 fee to sell. 

Basically, I just wanna know what you think about Prudential stock in general.  I mean with the market as shaky as it is, do you think its wize to sell now and take what she can get?  Or do you feel as though it would be worth her while to hold on to the stock and see what it does?

Prudential seems to be a pretty stable company and the whole sub-prime debacle didn't hit Prudential as far as I can tell (correct me if im wrong). 

[cheddar]

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Davinci001 wrote:

These shares are in a basic ESPP account (Computershare i think.. though she is not an employee.. she was given these shares by Prudential for having her insurance for basically all her life).  She is on a fixed income and the money could help her out, but she doesn't NEED the money per say.  She has had the shares since 2001.  She doesnt own any other stocks and doesn't know what a portfolio is.. lol.  As far as the costs, i think it is a 1 time 35.00 fee to sell. 

Basically, I just wanna know what you think about Prudential stock in general.  I mean with the market as shaky as it is, do you think its wize to sell now and take what she can get?  Or do you feel as though it would be worth her while to hold on to the stock and see what it does?

Prudential seems to be a pretty stable company and the whole sub-prime debacle didn't hit Prudential as far as I can tell (correct me if im wrong). 

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I'll leave the question of whether PRU is a stock worth holding onto, even though I know that's what you're really trying to find out.

I would only add a few things to keep in mind:

1) If she has held these shares in a taxable account since 2001, she has significant unrealized capital gains.  If you sell the shares and don't know her original cost basis, you'll need to find that out come tax time next year, and she will have to pay capital gains taxes for the sale.  Long-term capital gains tax rates are 15% for all but the lowest income tax brackets.  If, on the other hand, she does not sell the shares at all during her lifetime, but allows someone to inherit them at her death (not a pretty topic, I know), that person will receive an immediate step up in cost basis to the value of the shares at the time they inherited them, wiping out all unrealized capital gains to that point.

2) Having all of one's investments in a single stock is extremely risky.

3) Trying to time the market by figuring out whether a single stock is going to go up or down in the short term is extremely risky.  The market as a whole is smarter than you (and me) when it comes to setting securities prices appropriately.  (Unless your name is Buffett or Lynch or Gabelli.)

Message Edited by cheddar on 05-02-2008 09:51 AM