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Technology Stocks : EMC How high can it go? -- Ignore unavailable to you. Want to Upgrade?

To: Bill Fischofer who wrote (11200)	9/22/2000 4:05:15 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 17183

Bill, Well said. Too often we hear people say Sell XYZ since it has reached our target. The fallacy in this thinking however, is not taking into consideration the cost basis and the timeframe you are comfortable with. To anyone holding EMC, INTC, AMAT, etc for the long term, the events of days like today are mere noise. BK

To: Bill Fischofer who wrote (11200)	9/22/2000 4:35:48 PM
From: Gerald Walls	Respond to of 17183

Try to time a pullback, however, and the IRS will immediately help itself to 20% off the top. What this means is that you need to correctly time a 20% pullback just to break even on an after-tax basis. No. Wrong in three regards: 1) The IRS will take 20% of your profits, not 20% off the top. 2) Unless your basis is close to zero 20% of your gain will not require a 20% pullback in the stock price to cover. People trying to time the market generally are trying to capture multiple small gains. 3) The capital gain realized when you later sell the shares you bought back is from the new purchase price, not the old. You're not paying extra taxes, just paying the taxes earlier. If you have a $20 profit on a $100 stock and you sell, in order to buy back the same amount of the stock with the after tax money the stock would only have to drop to $96 (4%), not $80 (20%). Two things you do need to worry about, though, is 1) coming up with enough cash to pay the tax of 20% of the gains if you're wrong and you want to immediately buy back in, and 2) realizing a normally-taxed ordinary gain (st) instead of a preferentially-taxed capital gain (lt). I do agree that it is very difficult to time the market and that most (including myself) would do better expending their effort to identify and buy the best companies and then just hold them until they no longer meet that criteria.