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to be my preferred time frame for holding positions. But, like most amateurs, I can be quite patient in holding certain losing positions for a long time just to get back to even. |
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I recently had my patience pay off in finally getting out of Seagate Technology, which I had held for two and half years. Of course, I lost the opportunity cost of that money being in another position and actually making a profit, rather than sitting on "dead" money. But there is a certain satisfaction, I must admit, in holding it until I got my initial capital back. And in fact, I ended up feeling so content just with getting out of it that it ends up feeling like a gain, even though it is only a psychological gain, not a monetary one. The psychological perspective that allows this reaction might be stated as, "Been down so long getting even feels like up." |
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Curiously, while I have had the patience to hold fund positions for years at a time, along with individual stocks that I was holding losing positions in, I have not been one to hold winning individual positions for more than a year or so. I have never had any interest in holding a Coke or a Disney for many years. |
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Truth be told, I don't even want to own a Coke or a Disney. Now that I have had a taste for the faster track, I must admit the old, solid companies seem too slow for me. But I didn't want to own them even before the whole Internet revolution. |
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When was the last time Coke or Disney gapped up 9 1/2 points in the morning? When you have that happen with a CMGI, JDSU, or watch any other "red hot" like Redback Networks or dozens of others make a run for the moon, it's tough to get excited by a two-point move on a good day by Disney. |
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Consider Tax Consequences |
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Many active traders seem to pay little attention to the tax consequences of their short-term gains. They believe that they can make enough money with day and short-term trading to make taxes on gains a nonissue. Long-term traders have always been concerned about capital gains, not wanting to hold stocks less than a year so they will not pay short-term gains on profits. This has always been part of their rationale for not considering more active trading. What can active traders gain from investor's-mind on this issue? |
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Depending on what state you live in and your gains from trading and anything else you do that brings in taxable income, you |
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