Investing Thoughts - aggressive trading vs. buy and hold

[drunk]

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Capital gains are not taxable unless there is a trade and a profit is realized - dividends are of course taxable but many growth issues have smallish dividends

If the investor has a strategy of buy and hold and part of the reason he is investing is to pass along wealth to his heirs he may never have a capital gains tax obligation on that portion that will pass to his heirs

heirs don't pay capital gains taxes. Instead the asset is valued at a stepped up basis. This tax provision is huge for many heirs since they may inherit assets that the giver has owned for a long time.

If you're an excellent trader, it may be worth it to aggressively buy and sell stocks and pay the capital gains taxes.

But if you're not, or you're not sure you are, most are probably better off with buy and hold of an aggressive mutual fund or an index.

Many amateur traders, who see themselves as being highly skilled and highly profitable (compared to buy and hold) in reality are not - they're fooling themselves

Many professional traders underperform the indexes.


the average combined Federal and State tax rate is probably around 27%

imagine paying 27% for 35 years or so and also imagine instead of that having that 27% in your account to grow each and every year

most profitable traders will lose a substantial amount of their profits to taxes

of course, an individual's tax rate may be more or less depending on their situation -

even if the person is retired mandatory IRA withdrawals can bump up their tax rate

although all of a person's capital gains are taxable the maximum NET loss a person can write off on Federal Tax for one year is $3,000



here is what some of the high flyers from past years have done so far this year -(ytd) - these are 5 of the so called "Magnificent Seven"



Aapl (Apple) 20.89% - trails the s&p 500 index which is about 21.89%


Msft (Microsoft) - 13.86% - trails the index


Goog (Alphabet - Google) - 18.49% - trails the index


Amzn (Amazon) - 23.62% - barely beating the index


Tsla (Tesla) - 8.33% - getting crushed by the index




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