<How long before you think tech stocks may be worth a try?>
Sam, I'm sticking with my view that, given overvaluation issues, one should only invest in tech stocks with money one can afford to lose. This is despite the continued promise of the sector.
That said, I am still expecting a decent rally in August.
The biggest problem is the structure of the tax code. Let's say one makes $1M in ST gains in 1999, and is taxed at 39.6% federal and 10% state (as I am here in CA), leaving 500k. Let's then say one suffers $1M in losses in Mar/Apr 2000. As there is no loss carryforward for individuals (and to incorporate as a Daytrader requires payment of 15% in Employer/Employee Social Security taxes), one nets a loss of 500k over that 2-year period, instead of 0.
Thus, our tax code penalizes ST investors, and given the inherent high risk of the sector, you just can't win (as much as it would appear) playing the high flyers as I have the last two years.
So I plan to perhaps be 20% invested in tech stocks by August, and in other more secure investment vehicles with the rest. I am still up significantly over the last two years, but not like I was in Feb 2000. I have a nice lifestyle now, and there is no point risking it trying to recoup the Mar/Apr 2000 losses.
Regards, Rob |
