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Technology Stocks : Flextronics International (FLEX) -- Ignore unavailable to you. Want to Upgrade?

To: kolo55 who wrote (1060)	3/5/1999 9:12:00 AM
From: Robert G. Harrell	Read Replies (1) \| Respond to of 1422

Paul, It fascinates me how the "conventional wisdom" can fly in the face of reality. Earlier this morning I heard a report on CNBC where their tech reporter was still coupling Jabil's drop with 3Com's problems even though the information about how small a % of Jabil's business now comes from 3Com has been all over the business news wires. Michael Murphy was on CNBC late yesterday saying that his sources were not confirming a slow down in PC sales. Your discussion with Paul S. about increased taxes vs. trading profits prompted me to play with some numbers. I've been concerned with that issue ever since I backed into making almost all my 1998 positions short by frequent use of stop losses which often tripped. Early in January I created a paper portfolio of my positions at the end of '97 to compare my actual gains for the year with what I would have made if I had held and not traded. In my case the difference was very dramatic. I was way ahead even if I had no balancing losses and paid the highest marginal rate. I still, however, wrestle with whether I trade too much, so I played with the FLEX scenario implied by your exchange with Paul S. I compared two portfolios which both bought FLEX on Oct. 8 at $30. One holds and sells at $60 with a long term gain. The other successfully plays the hypothetical trade raised by your dialog, sell at $37 and buy back at $31, and then sells again at $60. If the trader paid the highest marginal rate of 39.6%, he would come out behind the long term holder. However, if he played the volatility for an extra $6 twice in the year, he would be ahead even at the highest marginal rate. If the trader is in the 31% bracket, he would make about $400 more per 1000 shares traded on only one trade during the year. I guess I'll continue to wrestle with the trade/don't trade, use stops/ don't use stops at least until I get my margin down to a reasonable level or get as rich as you <g>. Looks like a strong day ahead. Enjoy. Bob