The Tycoon Report

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24. Tom (1 year ago) Is this Spam?

    Regarding your article "How Taxes Kill Your Returns" , I'm interested in your method of computing taxes paid . In the table of returns vs taxes paid , for example , you showed annual taxes paid on $12,000 as $800.00 , at a tax rate of 40% . This kind of tax computation would most certainly be devastating . Please explain your tax computation method.

23. Pat (1 year ago) Is this Spam?

    Tell me what stock I can gain 20%. I don't mind to pay tax. I have self directing IRA. Needed more gain for future
    
    
    
    Pat

22. Ken (1 year ago) Is this Spam?

    Buy and hold investors, and most all investors that eschew trading need to delude themselves in this manner by necessity. How else can they be happy with 20% annual gains, when a competant trader can generally make 20% quarterly gains.
    
    Granted there are plenty of struggling traders who dont make this money, as there are struggling investors. It is not fair for a competant and experienced professional to compare himself to the struggling masses of wanabes.
    
    If you wish to make an honest comparision you need to compare those with a similar level of skill, experience, and resourses. Keeping in mind that the size of the account used affects the performance and prefered style, ie. it is much easier to trade quickly in a smaller account, when you are managing millions, or billions, you almost need to adopt a longer term time frame by necessity.
    
    Also you need to keep in mind the different goals, many investors are doing this on the side while they work full time jobs, their prime interest is in long term accumulation of wealth, others are working from a large capital base, and their prime interest is preservation of capital. While many traders are doing this as a job, or to supplement their investments, or to attempt to build a small amount of capital up quicker.
    
    
    
    Its amusing how narrow minded certain people can get, to the point where they have trouble accepting anything outside of their own little microcosm of mental space.
    
    Everything has its pluses and minuses, everything has a place, otherwise it wouldnt exist. Its necessary to evaluate with an open mind if you wish to see clearly.
    
    The entire nature of the markets have been changing. The markets no longer favor the buy and hold investor. Evolution goes to those who can adapt the best, the others become fodder for the rest.

21. will (1 year ago) Is this Spam?

    Hi,
    
    
    
    Just read the article on taxes and short term trading. The comparison between the $10,000 accounts leaves out one important thing - for a true comparison he should have sold all his positions in the buy and hold account at the end of the ten years and calculated the taxes that he would have to pay. If that was done I am sure that his great success in the buy and hold account would not be anywhere near the glowing return that he got by leaving out paying taxes. If the author thinks (as he seems to) that he will never feel the pinch of the taxman he truly is deluding himself.
    
    
    
    Will

20. johannes (1 year ago) Is this Spam?

    I never knew it whas that big of a difference. and thanx for al the comments. Everybody is here a teacher for me.

19. Heinz (1 year ago) Is this Spam?

    Hi Dylan,
    
    
    
    Good article that (I hope)will remind investors that investing is for the long term thus has nothing to do with trading. An investor that wavers should be aware that trading is gambling. For that you go to a casino - it is more fun. Long term investors are getting the benefit of compounding. A rich trader is rich because of his long term portfolio - if it were not for the trading he would be richer.
    
    
    
    Heinz58

18. John M (1 year ago) Is this Spam?

    Here,Here Dylan,
    
    Well said! You are spot on! But there's still a hidden tax we all pay when we are forced by Central Banking and Central Government to trade only in fiat currency. It's called inflation. It eats out our substance just as surely and to a much greater degree than King George of whom speaks the Declaration of Independence. "He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance." Income tax is the bane and curse of free trade.
    
    You also did not mention broker commissions. At least, commissions are payment for services rendered and not out right theft. But they are a cost to profit. So in both cases, the less frequently you trade the less is stolen from you by the IRS and the less you pay to brokers.
    
    
    
    Happy New Year,
    
    
    
    John Mahler

17. Ken (1 year ago) Is this Spam?

    I've heard all this before. There are many different ways of dealing with the tax dilema and making a profit over the long term, buying value and holding it long term is just one and not necessarily the best one at that.
    
    Too many long term value investors use the same arguments with the same tired examples.
    
    1. If I didnt think I could make considerably higher percentages trading there would be little reason to go through the effort.
    
    2. Combine approaches, hold a position and trade it. Dont turn your nose up at profits because its not your style. This is about money keep your personal attitudes out of it.
    
    3. Use your IRA. A Roth IRA is the perfect trading platform.
    
    4. Try converting your short term gains to dividends, through companys offering a one time special dividend. If you hold the associated stock for the qualifying period you should be able to declare the dividend and take the short term capital loss, therby offseting some of your short term capital gains.
    
    5. All of the above.
    
    Dont let your prejudice interfere with profits. If there is a skill you dont know or arent good at, learn and practice. This is not about your attitudes. It is about what works and doesnt work.

16. tlmalnick (1 year ago) Is this Spam?

    buy dividend stocks and use the dividends to multiply your stocks; but due to the falling dollar {NOW ONLY WORTH ABOUT 4 cents],make sure you buy foreign stocks!!!!!!!!!!!!!!

15. jester112358 (1 year ago) Is this Spam?

    Excellent point. If you must trade do so only in tax sheltered (i.e. IRA) accounts. Additionally, sell only over a period longer than one year so that your tax rate is long term (i.e. ~15%). Your argument would be even stronger if you included trading costs associated with each buy and sell.
    
    
    
    If there is any other doubt about the advantage of this style of investing, readers should examine the Forbes 400 list of the wealthiest individuals and the ones who are investors. None are traders.
    
    
    
    On the other hand, who doesn't like a 200% return in a few months on a "prudently" leveraged option? You'll need this kind of gain too to make up for all your "bad bets".

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