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Technology Stocks : Dell Technologies Inc.
DELL 122.55+4.4%Nov 21 9:30 AM EST
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To: Judy who wrote (94235)2/3/1999 1:08:00 AM
From: Chuzzlewit  Read Replies (3) of 176387
 
Judy, the only problem is that timing simply doesn't work. The statistics are misleading in a number of ways. First, there is the assumption that it is possible to replicate that kind of performance in advance -- a clear impossibility. Second, it ignores the tax consequences. What that means is that every year capital gains taxes are paid on a timing portfolio effectively removing yield. But no taxes are paid on a buy and hold portfolio. Thus, the deferred tax liability acts like an interest-free non-recourse loan from the government (a benefit not available to the timer). Finally, this and similar analyses do not recognize two important realities: bid/ask spreads and brokerage fees and commissions.

Some time ago someone posted a one year timing chart for trading Dell. There were a total of 26 trades that were made. Now, if you assumed some very simple real-life conditions, like a 1/4 point spread and $19.95 per trade and initial trading capital of $100,000, and a pay as you go capital gains tax fund, it was clear that even with perfect timing this approach was only marginally superior to a buy and hold strategy. I have no doubt that when you adjust for the fact that it is impossible to time perfectly the results would be substantially worse than a buy and hold.

But that's just this pussycat's opinion.

TTFN,
CTC
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