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<<Thus, to come back to Foolish principles, making money by trading (vice investing) requires a stock pick that outperforms the index funds even after taking a healthy chunk out for capital gains tax. Makes buy and hold about the only reasonable alterative for casual investors- otherwise, we have to beat the S&P by at least 20% just to cover the capital gains tax. >>

Hi again, Jason...

Don't get too concerned with the advertised rate of return. You have to compare apples to apples. If you are checking your after tax returns with other returns (such as mutual funds, S&P, etc.) you'll have to REDUCE those returns by tax payments also.

Unless you hold the stock or fund until death (not very likely in many circumstances), you'll have a tax impact some time in the future. So get those returns on the same playing field BEFORE you make your investment decisions.

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