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I agree with Al. You don't need to pay taxes until the end of the year
anyways. Whatever you make, you get to use to play again, and again.
Think also about IRA accounts, etc. where you don't even have to pay
taxes until the very end. By thinking long term, you might also lose
profits by not selling when the market drops. For long term
investments, a mutual fund wouldn't be a bad deal.
Suppose a boss were offer an employee a $50,000 bonus this year by the
end of February. Would you decline it because your tax bracket would
increase? If one were to follow Jerry's idea: "I won't take it.
However, if the company is doing great next year, please offer me a
bonus then because I would like to stay within the 20% tax bracket this
year...and btw please don't raise my salary either ever". If I were the
boss, I would just pocket the bonus for myself or give it to somebody
with more brains. This story ends with the employee dying on April
before he even gets a chance to do his taxes after having lived a happy
life earning below the 20% tax bracket :-)
Edwin
> -----Original Message-----
> From: Al Taglavore [SMTP:altag@xxxxxxxxxxxx]
> Sent: Wednesday, February 11, 1998 1:30 PM
> To: Greatelto@xxxxxxx; markjala@xxxxxxxxxxxxx;
> metastock-list@xxxxxxxxxxxxx
> Subject: Re: Trading and taxes
>
> Jerry,
>
> Very good words of wisdom! But this did not address the post. The
> question as I perceived it was should the tax consideration be a part
> of
> the trade. I find it very taxing to project price 3 days out, much
> less
> 18 months so that I can attain a tax break. I have to have a profit
> before
> taxes can be considered. "...any trading is for fun and
> games...entertainment, so to speak." Perhaps you would like to
> re-think
> that statement.
>
> Al Taglavore
>
> ----------
> > From: Greatelto@xxxxxxx
> > To: altag@xxxxxxxxxxxx; markjala@xxxxxxxxxxxxx;
> metastock-list@xxxxxxxxxxxxx
> > Subject: Re: Trading and taxes
> > Date: Wednesday, February 11, 1998 12:02 PM
> >
> > Short term trading generates income which is taxed at ordinary
> income
> rates.
> > When you factor in state taxes, the tax bite can be well in excess
> of
> 40%.
> > With short term trading, if you are successful, you are pretty much
> taxed
> on
> > an annual basis. If you are wrong, there are limits on using the
> losses
> for
> > tax purposes.
> >
> > Long term investors are accumulaters of wealth. The maximum tax
> rate is
> 20%
> > (Federal) and this tax is not paid until the sale of the asset. It
> has
> been
> > my experience that long term investors accumulate wealth faster than
> traders.
> > Now there are exceptions to every rule and sometimes trading wins.
> >
> > I do both, but the big bulk of my assets are long term. Any trading
> is
> for
> > fun and games....entertainment, so to speak. When one experiences
> the
> full
> > cycle of long term investing, it is scary what one can accumulate.
> My
> > recommendation would be to invest 70-90% in a long term program and
> then
> play
> > games with the balance. If you should be fortunate enough to trade
> > successfully, then pay the taxes and smile.
> >
> > Jerry
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