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Re: [amibroker] Re: Traders Tax


  • Date: Wed, 9 Dec 2009 09:56:05 +0100
  • From: "Ton Sieverding" <ton.sieverding@xxxxxxxxxx>
  • Subject: Re: [amibroker] Re: Traders Tax

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And something else Ed. You are talking about pension fund managers and the DOW :
 
Let's assume this is the return you can expect in your pension fund. How many trades can the manager make before you are losing money when they tax you 0.25% per trade? 
 
How many fund managers did beat the DOW ?
 
Regards, Ton.
 
----- Original Message -----
Sent: Tuesday, December 08, 2009 10:32 PM
Subject: Re: [amibroker] Re: Traders Tax

 

hi Mike,
 
I did not include dividends. Do they pay dividends these days?
 
For the calculation I use the Dow Jones. The data I have on Oct 1 1928 the DowJ closed at 240.01. Roughly assuming that from then to now there are 81 years and also I assume that the average inflation is 3.3% per year. Total increase per year is 3.3 + 1.5 = 4.8% which in 81 years results in the Dow going from 240 to 10212.
 
Only 1.5%/year is creation of true value. Yes I indeed omitted the dividend,
 
rgds, Ed
 
  
 
----- Original Message -----
From: Mike
Sent: Tuesday, December 08, 2009 10:11 PM
Subject: [amibroker] Re: Traders Tax

 

Where are you getting the 1.5% figure? It does not sound right and is not at all consistent with the S&P 500 (more like 9%):

http://politicalcalculations.blogspot.com/2006/05/mapping-sp-500-performance-since-1871.html

Regardless, your figure is perhaps unrealistic (at least in the last couple of decades) to use in any current analysis given that your average bank account would pay the same with zero risk.

Just to be clear; I'm very much against the tax and believe that it is more likely to fail than to be passed. But, at the same time, it would not surprise me in the least to see it go through, even globally. We're living in turbulent times.

Mike

--- In amibroker@xxxxxxxxxps.com, "Edward Pottasch" <empottasch@...> wrote:
>
> let me add to that:
>
> did you know that over the past 100 years the stock market only returns about 1.5% per year? Let's assume this is the return you can expect in your pension fund. How many trades can the manager make before you are losing money when they tax you 0.25% per trade?
>
>
> ----- Original Message -----
> From: Edward Pottasch
> To: amibroker@xxxxxxxxxps.com
> Sent: Tuesday, December 08, 2009 9:00 PM
> Subject: Re: [amibroker] Re: Traders Tax
>
>
>
>
> if they think they will make easy money on this they are fools. Trading volumes increased because costs are low and access is easy. Taxing it 0.25% will kill it off completely. If they do it to win votes then wait for Joe Six Pack finding out that he is paying for this tax in his pension fund as well. These pension fund managers will know how to charge Joe Six Pack for all additional costs they encounter. Don't they understand trading is a zero sum game? If they are worried we push up prices then I can say I shorted oil today (for a trade). Let them look at management of listed companies paying themselves 400 to 600 times that of the average worker. Then they can win some votes too.
>
>
>
>
> ----- Original Message -----
> From: Mike
> To: amibroker@xxxxxxxxxps.com
> Sent: Tuesday, December 08, 2009 8:34 PM
> Subject: [amibroker] Re: Traders Tax
>
>
>
> I suspect that investors would hardly notice the tax. Depending on the frequency at which they move in and out of stocks, it would likely end up being comparable to a mutual fund management fee.
>
> The ones most at risk, including myself, are high frequency traders. The tax would seem to be aimed at hedge funds that constantly take micro profits, quickly moving in and out of positions.
>
> Unfortunately, it severely impacts day traders and swing traders too. It is not uncommon for high frequency traders to have several hundred trades in a year. With smaller accounts that can be hundreds of thousands in volume, and several million dollars in volume for larger accounts. At those rates, that amounts to tens of thousands of dollars in additional taxes.
>
> If politicians only consider the impact as it relates to investors (the vast majority), then the tax appears well targeted at Wall Street. It is only retail traders (minority) that are at risk of being put out of business.
>
> The bigger impact is, I believe, what impact it would have on capital leaving the US for opportunities elsewhere.
>
> If US markets are worth the premium for their stability, liquidity and diversity, then capital will remain and the politicians will pass the tax. If capital is expected to flee, the tax will not be passed.
>
> If even just a few of the larger worldwide exchanges agreed on a tax (in order to leave nowhere for capital to flee), then the countries involved could reap huge revenues. After the amount of money that has been poured into trying to save the respective economies, that revenue stream has got to look pretty appealing right now!
>
> Mike
>
> --- In amibroker@xxxxxxxxxps.com, Nick de Peyster <nickdepeyster@> wrote:
> >
> > The odds of this passing strike me as extremely low. So far the government has been extremely supportive of the financial sector ... is there any evidence of a change in the winds?
> >
> > I would think this trader tax might hurt momentum investors rather than traders (especially counter-trend traders).
> >
> > Reason being that the momentum investors tend to count on the counter-trend traders to provide liquidity. Of the two, the countertrend traders have the shorter holding period and smaller gains so the tax will hit them most heavily.
> >
> > So what will happen is that the countetrend traders will become more selective to offset the tax. Pre tax the countetrend trades will become more profitable although after tax it won't make a difference.
> >
> > The momentum investors will take a bath, because there will be fewer countertrend traders on the other side.
> >
> >
> >
>



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