The Texas populist take on the tax cut

Doug Henwood dhenwood at panix.com
Fri Jan 10 16:04:22 PST 2003


Jordan Hayes wrote:


> > Does that mean trading stocks actively?
>
>When appropriate :-)
>
>> you're almost certainly worse off trading
>> than just buying & holding
>
>You're speaking on a "risk-adjusted" basis of course?
>
>My personal trading style can be summed up like this:
>
> - Get an idea; no ideas? Do something else.
> - See if it's actionable; it's not? Do something else.
> - Determine tax advantage; choose account appropriately.
> - Enter position
> - Change my mind about the idea? Exit position.
> - Underlying factors leading to the idea change? Exit position.
>
>"Holding" (outside of continued support of the idea) in this scenario is
>just dumb and leads to disproportionate risk-adjusted losses.

Of course it's risk-adjusted. Take a look at some of Barber & Odean's papers: <http://faculty.haas.berkeley.edu/odean/Current%20Research.htm>. Men, one of their papers shows, are especially prone to the overconfidence that leads to overtrading.

But like I said, you may be special.

Doug



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