Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: freeus who wrote (89715)	1/18/1999 1:53:00 PM
From: Chuzzlewit	Read Replies (2) \| Respond to of 176387

Freeus, that is exactly the fallacy: focusing on rate of return vs. total return. The buy and hold investor is constantly in the market, and the trader is in and out. Consider the situation that I posed: you have $100,000 of capital at stake, and the buy and hold investor (who will be taxed at 18% based on LTCG) earns 30% pre-tax over the course of 10 years. After tax this amounts to 27.647%, so the trick is for the trader to earn $27,647 after taxes using the identical beginning stake. That requires him to earn $38,399 pre tax. Notice that in this calculation I am using total dollars based on identical initial stakes. I haven't even dealt with the fact that there is a lot of empirical evidence that shows that market timing (TA) is futile. There have been a very few studies that indicate that there may be some slight advantage to market timing techniques, but the only one that I know of that usually works is the "January Effect", but that is based on fundamentals (tax-induced selling) rather than TA. Jimleon issued a challenge on this thread (backed with a money bet) to those who felt they could beat a buy and hold strategy. There were no takers, although several people sniped at him. TTFN, CTC