So you’re the world’s greatest trader? Taxes will fix that. – The Washington Post

So you’re the world’s greatest trader? Taxes will fix that. – The Washington Post.

The loss you experience from taxes on short term gains kill any possible advantage that short term trading might get you. As always, infrequent trading and asset allocation win out.

I looked at the spreadsheet they used to calculate this, and the gap is widest in the most recent year of data; ie, in 2013, when the market went up 32%, and the active trader made 41% (and they were starting at the highest portfolio value up to that point). In that instance there is a very wide gap opened by the magnitude of the taxes. Most other years are not quite so drastic. But this still shows that you don’t really do much better — maybe the same at best.

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