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Technology Stocks : Dell Technologies Inc.

DELL 125.97

-1.0%

Nov 25 3:59 PM EST

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To: TREND1 who wrote (120387)	4/24/1999 1:39:00 AM
From: Chuzzlewit	Read Replies (2) of 176387

Larry, you would actually have less than you think in a non tax advantaged account because you would be paying taxes quarterly which decreases the amount you can invest. In other words, the government allows you to use taxes as non-recourse margin at a 0% interest rate! Let me illustrate by making the following simplifying assumptions: 1. You pay taxes quarterly on HAL's account; 2. HAL is in and out of the market once per quarter, but the gain is spread evenly through the year. Thus, I assume that each quarter HAL generates 34.5% in profits; 3. I assume that the short-term capital gains rate is 28%; 4. I assume that the LT capital gains rate is 18%. Now look at the consequences: The after-tax value of HAL's investing is $30,0342, which neglects transaction costs and bid/ask spreads, and the inability to buy partial shares. HAL's after-tax appreciation rate is 141% per annum I believe you said that HAL beat buy and hold by 15%. I take it that you meant that the pretax value of the buy and hold would be $37444.67. But the after tax value would be $32,504.63. The buy and hold after-tax appreciation rate is 157% per annum over the same period. TTFN, CTC

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