Sell WFC to reduce concentration risk; YTD decline of 23% outweighs tax hesitation.

My grandfather gifted me $20,000 of Wells Fargo stock when I was young after his local community bank was acquired by them. I know having that much money in a single stock is a major concentration risk, but I've been very hesitant to diversify because the capital gains tax hit and strong dividend income.

So, how would you recommend unwinding or diversifying a position like this in the most taxefficient way possible? Congratulations. I mean, you're sitting on $780,000 worth of capital gains on an incredible gift by your grandfather and it's incredible to see you've been so steadfast and responsible with his legacy and you've been able to to grow that in a responsible manner.

You could donate $100 or $200,000 worth of the stock in your grandfather's name.

The last thing you want to do is sit on this Wells Fargo stock for four years or something crazy. And you know, Wells Fargo year to date is down 23%. Which means at the beginning of this year, this 800,000 might have been a million.

And even if you sold all of it in that instant and paid your capital gains, you still would have had more than this 800,000 you have now or roughly 700 something you have now.

Like taxes take a back seat. If a if if a stock is going down or you're way too exposed to a sector or something's going on here, I don't care about the taxes. Figure out the taxes later.

The taxes are important, but like you can lose way more money in concentration risk than you ever could lose in in taxes depending on, you know, the long-term capital gain tax rate we're we're talking about here with Wells Fargo.

could they take $100,000 a year for 5 years and diversify it out into other things that are less volatile and not going down and and create better gains? Absolutely.

But I like where you're at, Austin. I would sell it. I would not want all that money in one place. I would stop worrying about the taxes. People worry about taxes so much that a lot of times if they did the math, they'll find out that by sitting in something that they shouldn't be, especially at that high of a concentration risk, they're actually leaving more money than they would pay in the taxes on the table in growth because they're so fearful of the tax bill.

Sell it all, take the hit, move on and regrow it or do what Austin said, and that is that stage selling where you sell off 150,000 a year for three, four, five years. Get yourself diversified.

I personally would sell it. You didn't pay for it anyway. It's all from growth and dividends, so you're not being hurt by it anyway.

I wonder if there's a world where our friend Chris J can thoughtfully sell covered calls 2 to 3 weeks out against this position and make a ton of money on the premium here.

And I'm just doing this live. It's trading at 73.40 a share right now at the moment. If our friend Chris Jacobs perhaps wanted to sell covered calls at $73 a share and he's got about $110 contracts that he would be able to sell, he would be able to make $21,000 of premium on that specific covered call option contract.

So 21,000 plus he would make $73 a share against his like almost 11,000 shares. So, the reason I say this is that $21,000 you, yes, it's taxable income at ordinary taxes. So, let's like peel off, you know, 30% of that.

So, now you're left with $14,000. But that $14,000 that you're left with can be used to figure out the tax situation, right? You can use that to offset the taxes, assuming you're comfortable with selling the shares 2 weeks from now at $73 a share.