On tax consequences of selling.

Investment Analysis Clubs Saul’s Investing Discussions
21

Smorg’s conclusion that one should trade positions MONTHLY to be like Saul

Just to be clear, I did not make that conclusion. I did note that he traded in almost every stock he owns almost every month in the 3 months I analyzed, but my conclusion was:

What I see in Saul is an investor who is constantly analyzing what he owns and what he should own.

I was merely referring to the conclusion that monthly churning of a portfolio leads to better after tax returns.

I didn’t make that conclusion, either.

The debate is moot, because the pre-tax returns one achieves on a long term buy and hold strategy versus a more frequent trading strategy will be different.

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22

The difference between 40% short term tax and 20% long term tax

Of course money coming from a 401k or Traditional IRA is taxed as income, so if someone is paying 40% marginal tax rate on short term gains, then that means they are paying that on any money that comes out of the IRA (but only when it comes out, so compounding works better).

P.

**Paying a 40% tax rate is referred to as “Rich people problems” :wink:

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