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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: DownSouth who wrote (20843)3/20/2000 6:48:00 PM
From: Mike Buckley  Read Replies (3) of 54805
 
Having mentioned the huge tax obstacles that shorter-term strategies have to overcome to achieve the returns of longer-term strategies, I decided it was required of me to show the numbers.

Scenario #1
Invest $10,000.
Sell two years later, having achieved 15% annual pre-tax returns.
Pay 20% United States long-term capital gains tax.
Reinvest the remaining capital, repeating the two-year cycle for a total of 30 years.

Scenario #2
Invest $10,000.
Sell 30 years later, having achieved 15% annual pre-tax returns.
Pay 20% United States long-term capital gains tax.

Comparative After-tax Results
Scenario #1: $312,759
Scenario #2: $531,694

That's the proof that the short-term strategies have to perform so MUCH better on a pre-tax basis to come close to the results on an after-tax basis of the longer-term strategies.

--Mike Buckley
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