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Blog on a guy that has invested $30k in the market, focused on a deep value investment strategy. Has also built a public google doc tracking his investment:
So, a stock picker calling his picks "deep value"? I'm not too sure I understand the experiment. I mean I get he wants to beat the s&p 500, it's "easy" in a bull market when everything is going up and you pick the larger well known companies. But those same companies also got hit as hard as the "market average" during the 08 crash. The rest weren't around until afterwards.
He's doing as good (or as bad) as i am with my all stock market ETF and All Bond market ETF combo. I am becoming more and more convinced that all market etf's/funds are just as good as picking individual stocks. Perhaps it's because of how the market is right now...
GameStop is about 2 years away from being obsolete. Games will go the way of movies. They are already being downloaded through consoles, I expect this to become the norm in the next 2-3 years.
He's doing as good (or as bad) as i am with my all stock market ETF and All Bond market ETF combo. I am becoming more and more convinced that all market etf's/funds are just as good as picking individual stocks. Perhaps it's because of how the market is right now...
One advantage of picking stocks is you can plan for tax implications. Selling your losers at short term capital loss, selling your winners at long term capital gains, and tax loss harvesting can make a big impact on after tax returns.
On larger accounts the tax implications greatly overshadows the trading costs.
after tax returns is the true measure of success.
Last edited by bigboibob; 04-03-2015 at 07:11 AM..
One advantage of picking stocks is you can plan for tax implications. Selling your losers at short term capital loss, selling your winners at long term capital gains, and tax loss harvesting can make a big impact on after tax returns.
On larger accounts the tax implications greatly overshadows the trading costs.
after tax returns is the true measure of success.
You can do the same with etfs but you are creating a potentially new liability with a new ltcg window either way
You pay 5000 for ge, sell it for 4000 and realize a 1k loss
You then buy 4000 worth of WMT and it grows to 5000 you have a unrealized 1k gain
say you have two portfolios. 1 holds an etf, the other holds 2 stocks.
For simplicity, assume the etf of the first portfolio holds the 2 stocks of the second portfolio.
The profit for each after about a year is 1000. 1 stock within Portfolio 2 was sold at long term capital gains of 1500, the other stock was sold at short term capital loss of 500. Portfolio 1 was sold at long term capital gain of 1000.
say you have two portfolios. 1 holds an etf, the other holds 2 stocks.
For simplicity, assume the etf of the first portfolio holds the 2 stocks of the second portfolio.
The profit for each after about a year is 1000. 1 stock within Portfolio 2 was sold at long term capital gains of 1500, the other stock was sold at short term capital loss of 500. Portfolio 1 was sold at long term capital gain of 1000.
say you have two portfolios. 1 holds an etf, the other holds 2 stocks.
For simplicity, assume the etf of the first portfolio holds the 2 stocks of the second portfolio.
The profit for each after about a year is 1000. 1 stock within Portfolio 2 was sold at long term capital gains of 1500, the other stock was sold at short term capital loss of 500. Portfolio 1 was sold at long term capital gain of 1000.
Both portfolios had a pre tax gain of 1000 but portfolio 2 has a higher after tax gain
Your example is shortsighted and only part of the equation. First are you turning over 100% annually? Second what are you doing with the proceeds? Fwiw your net 1000 ltcg is taxed the same in both scenarios
Quote:
Long-term gain with short-term loss
Again we have to consider two scenarios. If the gain is bigger than the loss, you have a net long-term gain and get to take advantage of the favorable rates for the net gain. If the loss is larger, it is a net short-term loss. Just like the previous situation, you can use up to $3,000 of that loss against other types of income, with any balance carrying forward to the next year as a short-term loss.
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