From: Brett Paatsch (paatschb@optusnet.com.au)
Date: Wed Jun 11 2003 - 01:50:04 MDT
Ramez writes:
Sorry to jump in (and I've not read all the thread)
> From: Phil Osborn [mailto:philosborn2001@yahoo.com]
> > Anyway, the rub is that if I sell at the points where
> > I might think I ought to, then I get to pay a large %
> > of any earnings in taxes. Suggestions? Note that I
> > am a real amateur in this area.
>
> Buy and hold. Or is that too old fashioned of me?
I assume that the situation in the US is the same as in
Australia and that you can deduct capital losses from
capital gains.
Say a trader has a portfolio of stocks all of which he
expects to go up over say twelve months but not
necessarily without bounces along the way. The trader
might sell and buy back one stock B, thus crystallising
a capital loss which can be used reduce his capital gain
made on selling A. Because he buys B back
immediately he has effectively "held" B but he keeps
more of the profit on A.
Brokerage of course needs to be considered.
And I am no expert in this area either.
Brett Paatsch
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