Day Trading Equals Gambling.

People are wondering whether or not buy and hold is dead. Many people are becoming day traders, and a small percentage of those are actually making some money in these markets because of the swings.

However, day trading is gambling in my opinion, and subject to huge tax burdens of 35%. Let's simulate the day trader.

I have $10,000 I invest in an issue. The value goes up %10 in a month. I sell, and make $1,000. After taxes I make only two thirds of that, namely, $666. Here's the problem. I just gave up $333, and let us say the stock keeps going up. I miss out on the further upside, and I paid %20 more in taxes, rather than waiting a year to sell. Let's say the issue declines in value after the upside. It would have to decline by one third to make up for the tax loss. The odds of micro-timing the market are horrible. Thus, everything is out of favor for the day trader and it is the equivalent of gambling.

Buy and hold is wise. There are times when selling is also wise, even with tax losses, but this needs to be based on fundamentals.