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Technology Stocks : Vitesse Semiconductor
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To: Dr. Id who wrote (3610)8/29/2000 9:01:51 AM
From: OldAIMGuy  Read Replies (1) of 4710
 
Hi Dr Id,

You bring into the conversation an interesting point...taxes. The burden of our Uncle's partnership in our investing is always relevant. Each year I look at my Schedule D form for clues as to whether I am being foolish or smart with my activities. Compared to my Short Term Trading compatriots my portfolio turnover is very small. It averages 25% to 30% of portfolio value per year. This is in sharp contrast to the X00% turn over rates of many individuals these days as well as what the mutual fund industry is now doing. My rate is less than most "aggressive" mutual funds.

However, in my case, there's no new capital coming into my portfolio from "earned income" since I'm retired. So, the only way for me to advantage my portfolio during times of market stress is to have "purchasing power" in reserve for those times. Going one step further, the only way to build that reserve is through profitably selling shares along the way upwards.

It's then a matter of figuring what the gain must be between accumulation and dispersal to always be paying all costs including taxes and still have more left at the end. Because the majority of my selling is LONG TERM CAP. GAIN, the tax burden is mild compared to ST Trading. Because I buy equities for their long term potential, it's only during the first calendar year that any trades are penalized by ST Cap. Gains. After that it's kinder.

I would have made more on VTSS as Buy&Hold, but my moderated risk methods have done okay for me as well. VTSS remains my single best performing stock I've owned since retiring to full time investing.

Best regards, Tom
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