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Clay asked: If I choose to
contribute to a self directed Roth and make it Foolish, will it be possible to sell and purchase stock every year when the foolish four changes without additional tax penalties?

There are no tax penalties at all. This allows you to do the Foolish Four the way is was meant to be done. Postponing the changeover until the end of 12 months is done to pay long-term capital gains taxes instead of short-term. Since there is no tax on more frequent changes, you should be buying and selling several times a year.

That is, you sell a company as soon as its P/E rises high enough to put it out of the Foolish Four and buy the right one.

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