What if You Were the World’s Greatest Trader® ?



My Sunday Washington Post business section column is out. This morning, we look at the impact of taxes on personal trading accounts. The print version used the headline A harsh reality for all you stellar
active traders; the online version is So you’re the world’s greatest trader? Taxes will fix that.

The bottom line is that even a 40% gain over broad indices is insufficient to beat the taxman’s short term 30% bite.

Here’s an excerpt from the column:

“Imagine that 24 years ago, your best friend invested $10,000 in the S&P 500 and held on through last year. He would have amassed $76,266. That number includes taxes paid annually on whatever dividends came his way at the highest taxable bracket.

Compare that with you, the World’s Greatest Trader. Had you put that $10,000 into a trading account that same year and annually crushed the S&P 500 by 400 basis points, you would have amassed an after-tax return of only $69,197.

In other words, your passive-index buddy would have beaten you, the World’s Greatest Trader, by about 10 percent. (Note that I am ignoring all of your trading costs.)”>

The post included the spreadsheet we used to test this.  A screen grab is below, or you can download this and play with it yourself.

trader tax.xls
click for ginormous version of print edition



So you’re the world’s greatest trader? Taxes will fix that
Barry Ritholtz
Washington Post, July 27 2014 

What's been said:

Discussions found on the web:

Posted Under