Short Squeeze

This article was first posted July 1, 2026.

I had an interesting development in mid-April. One of the long forgotten stocks in my portfolio (Avis Budget Group) was the target of a short squeeze and produced a nearly $500k capital gain. I wouldn't rent a car from them, but I'm now proud to be an investor, and when the trade settled, an ex-shareholder. (See chart.)

As some of you know, my policy over my 30+ years of early retirement has been to limit interest and dividend income to the maximum extent possible, while making portfolio withdrawals with capital gains and tax-paid returns of capital. I'm a LTB&H investor who rarely makes a trade and limits investing activity to a couple of hours of tax planning and portfolio rebalancing the last week of the year. April's activity was my first stock transaction in eight years.

Of course, there is some cost to this Powerball level win. I've got a large capital gains and 3.8% Medicare surtax to pay and I'll be in the top IRMAA bracket in 2028 paying an extra $600/month in penalties on my Medicare Part B and D premium. But that's fair, there's no reason that middle-class working people should be subsidizing my Medicare insurance.

What to learn from this event?

The lesson here is that even if you have everything on autopilot, it still makes sense to log into your account once or twice a day to detect if you have any large swings in your account value one way or another. Back in 2024, I had a nearly $900,000 ACTS transfer theft that I was able to stop before the money was spirited away to Russia or the Ukraine. And last Friday, a big swing in the positive direction that I was able to act on.

Also, as the chart below illustrates, few people get out at the top.

When I sold on Friday at $477/share, I joked, "I'll be disappointed next week if it closes at $600." Of course, it broke $600/share on Monday, $700/share Tuesday, and a high just short of $850/share during interday trading on Wednesday, before the short squeeze ebbed, and the share price collapsed to the level supported by sales and earnings. I likely left at least $250K on the table, but better early than late.