Capital gains tax and reinvesting

[Value Collector]

Certainly benefits in that.
The only X factor is the capital gain of 10% or whatever maintained over the full year.
Cant see the point in making a 10% loss over a year in the attempt of cutting a tax gain.
Unless of course your earning big bucks and a deduction from capital loss comes in handy.
But that gets counter productive the greater the loss becomes.

My point is that if you know a company is growing at a rate that will create say a 10% pa capital growth over say a ten year period, (throughout the ups and downs) you would end up better off holding it without selling, you would end up earning more than a guy that found a 10% idea each year that traded it and paid tax each year.

Off course you risk being wrong, but so does the guy buying and selling.

 

[Value Collector]

thats very true not poker though lol i make good coin there

You might not have to pay tax on your winnings, but the loser doesn't get to write off his losses either, so it's no skin off the governments nose.

They will however tax the organizer if it's an organized event at a club or casino, so they get their pound of flesh there, the organizer also takes a share of the revenue normally.

 

[tech/a]

My point is that if you know a company is growing at a rate that will create say a 10% pa capital growth over say a ten year period, (throughout the ups and downs) you would end up better off holding it without selling, you would end up earning more than a guy that found a 10% idea each year that traded it and paid tax each year.

Off course you risk being wrong, but so does the guy buying and selling.

But not as well off as the guy who has a 30 % idea.
Different strokes -----

 

[Value Collector]

But not as well off as the guy who has a 30 % idea.
Different strokes -----

you are kinda missing the point, the exact same principle works for a 30% idea trade vs a 30% idea investment.

off course if investor A finds better investments than investor B, he will get better results, (although they do have to be quite a bit better to over come the tax and cost hurdle), but my point is that when you are dealing in similar returns, the less active of the two will do better due to less trading costs and tax events.

 

[tech/a]

Yep
But not for a 30 % idea and a 10 % investment

Same for same yes of course due to the tax benefit

 

[Value Collector]

But not for a 30 % idea and a 10 % investment

works both ways though, so not much point bringing it up, it just confuses the point

 

[tech/a]

If I'm covering the tax over and above from better performance then that is a better way of utilising my money.

10% no tax
30% taxed who's better off?

I get what your saying but there are more ways than just buy and hold.

 

[Value Collector]

If I'm covering the tax over and above from better performance then that is a better way of utilising my money.

10% no tax
30% taxed who's better off?

I get what your saying but there are more ways than just buy and hold.

30% no tax
10% taxed who's better off?

obviously which ever side you pin the 30% gain on is going to do better, so that's not part of my original example,

there is no rule that says that traders on average will get better gains than inactive folks, in fact "on average" they will do worse, And from his posts, I haven't seen anything that suggests this guy is above average (yet)

 

[egosbar]

im average at best lol thats why im asking questions not answering them , thanks though i think ill play safe for a bit and just keep it rolling while i learn more

 

[Value Collector]

im average at best lol thats why im asking questions not answering them , thanks though i think ill play safe for a bit and just keep it rolling while i learn more

My comment wasn't meant to be be an attack on you, I was just pointing out a couple of facts about Active trading vs longterm passive holding that a lot of people miss.

The first fact is that a completely in active, passive and lazy investor can get a good return on his capital by simply buying into an index that covers the whole market, by investing in everything and simply holding it he is guaranteed to get the market average return.

Now, the only reason anyone would avoid taking this simple passive approach that guarantees them the market average is that they believe they can beat that average.

Traders, believe they can beat that average by buying and selling at the ideal times, they will jump in and out of the market attempting to take advantage of their predictions, and some of them will succeed.

My comment was based on the fact that although some traders will succeed in beating the market average, those "extra returns" are being funded by the traders who failed. So as a group, on average, traders will fail to beat the average, and due to the significantly higher Trading costs etc, as a group they will under perform the inactive.

 

[tech/a]

My comment wasn't meant to be be an attack on you, I was just pointing out a couple of facts about Active trading vs longterm passive holding that a lot of people miss.

The first fact is that a completely in active, passive and lazy investor can get a good return on his capital by simply buying into an index that covers the whole market, by investing in everything and simply holding it he is guaranteed to get the market average return.

Now, the only reason anyone would avoid taking this simple passive approach that guarantees them the market average is that they believe they can beat that average.

Traders, believe they can beat that average by buying and selling at the ideal times, they will jump in and out of the market attempting to take advantage of their predictions, and some of them will succeed.

My comment was based on the fact that although some traders will succeed in beating the market average, those "extra returns" are being funded by the traders who failed. So as a group, on average, traders will fail to beat the average, and due to the significantly higher Trading costs etc, as a group they will under perform the inactive.

Agree.

There will be leaders that bolster the index.
Would it not make sense to just invest in them
Review every 3 or so months and adjust if necessary.
Top 5 non correlated would do better I'm sure than
simply following an index.

 

[Value Collector]

Agree.

There will be leaders that bolster the index.
Would it not make sense to just invest in them

That is certainly a route to beating the market, Warren Buffett for example beat the market by about 11% on average for the last 50 years by being able to figure out which companies

1, have competitive advantages

2, and what they fair value of them is

Then accumulate them when they are below fair value, which means over time his return will be above the market average.

Warren Buffett himself has said though that 99% of people won't have the skills required or the emotional stability to invest that way, and hence should stick to index style investments.

Its the same in trading (I guess), the majority of people that try their hands at it are going to under perform, it has to be that way mathematically.

To think that on average people can perform better than average, is illogical. a large portion of those that try will have their lunch eaten by the ones that are either skilled or lucky.

 

[egosbar]

i play poker and im skilled but lucky is just as important heres hoping im lucky on calidus lol

 

[Value Collector]

i play poker and im skilled but lucky is just as important heres hoping im lucky on calidus lol

Well, the stock market can be used as a casino if you are looking for a place to gamble, but it is certainly not its intended purpose, I use it as a place to buy pieces of companies to add to my portfolio.

 

[crackajack2]

Does a Book maker gamble?

Hope so lol

 

[crackajack2]

Certainly benefits in that.
The only X factor is the capital gain of 10% or whatever maintained over the full year.
Cant see the point in making a 10% loss over a year in the attempt of cutting a tax gain.
Unless of course your earning big bucks and a deduction from capital loss comes in handy.
But that gets counter productive the greater the loss becomes.

Are you an accountant?

 

[tech/a]

No a duck

 

[crackajack2]

No a duck

quack quack lol