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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Honest Abe who wrote (3403)	3/2/1998 1:49:00 PM
From: Scott Mc	Respond to of 79199

Ron, of course the major assumption is that the stock keeps going up, with a Microsoft or a Home Depot everyone does well and buy and hold works, however if you were into Apple or Novell buy and hold doesn't work., and tax free accounts can also eliminate the tax discrepancy. I certainly don't have the answer and try and be somewhere in between with some long term holdings over 4 years and some short term 4 days. If I have a general rule its quality long term and volatility short term. Scott

To: Honest Abe who wrote (3403)	3/2/1998 2:00:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 79199

Abe, I fully understand what you are saying - we must think after tax gains and I wholeheartedly agree. However, using the methods of investing I proposed, you would have followed TXN up with stops and let it go when it started to drop, then followed it down with stops (presuming you believe the stock will rebound). During the period it was falling, the monies could have been in another stock that was gaining. The overall gain would more than offset the difference in tax rates. Very few individual investors are in a 36% tax bracket and many are dealing with non-taxable accounts. BTW - Buffet has a different situation in that any trade he might make influences the market. When he started, he did not hold nearly as long and made frequent trades. The same can be said for most anyone that has been successful in the market. For what it's worth, Ron

To: Honest Abe who wrote (3403)	3/3/1998 7:02:00 AM
From: Richard Query	Read Replies (2) \| Respond to of 79199

Investing vs. Trading <So, if you give the 'trader' and the 'buy and holder' both 15% pre-tax returns, the buy and holder is ahead of the trader by 5.68% assuming a short two year time frame. Extend the time frame to 5 or 10 years and the results are geometrically higher.> "if" is the key word, the goal of a trader is to catch many small upward moves (or short downward moves) during the year. What most investors seem to do is look at trading the same way as investing, while they are 2 total different animals. As an investor one might have 10 different stocks each being 10% of portfolio, so if the average gain is 15% they make 15% for the year. while a trader might own each of those same 10 stocks 3-4 times during the year making say an average of 3% each time. The real advantage is that as a trader, is that on each of those times a trader will have 1/3 to 1/2 of his/her equity in the stock. There for a Trader might well make 40% (40 x 3% x 1/3) playing the same stocks while only averaging 12.5% on each stock. Trading for the most part is based on technicals and news vs. Investing which is based on fundamentals. Both can help you reap higher returns in the other. Good fundamentals adds an added margin of safety to trading, and the technicals better entry prices for investing. There are many ways to make money in the market. Each of us has to find what we are comfortable with and what works for us personally. Darth