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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.15

-1.0%

2:31 PM EST

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To: rkral who wrote (60990)	8/10/2002 12:48:09 AM
From: ehasfjord	Read Replies (1) of 77400

You forget that you have already paid taxes on the funds that you invested. Now, you are also paying taxes on the distributions that that fund must make. Even though the funds value may go down it doesn't make a difference if the fund sold "stuff" that had gone up in value. Therein lies the double taxation. What most mutual funds do in a bear market: 1. People start redeeming (cashing out) their $'s. 2. If the fund needs to raise cash for these redemptions, the fund will sell stocks that are highly traded, and may easily be purchased back at a lower price. Examples of these stocks are CSCO, ORCL, HD, IBM, etc... 3. You will pay the price re: gain that the fund had between the original purchase price (prior to the sale) and the sale price. This shows up as a "dividend". 4. This type of crap goes on until there are no more redemptions. This is known in the trade as capitulation! 5. At this period in time, the market starts going up since the funds start buying back the "easy traded" stocks that they had sold, at the (normally) much lower price. 6. John Public see's this happening, says gee, I ought to get back in the market, and WHAM you get a 300 point swing. Take Care!

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