Tuesday, 22 October 2013

Unusual phenomenon could predict the next major stock market sell-off

Through the Daily Crux,

... An interesting bit of analysis I just became aware of, courtesy of Gordon Scott, CMT, co-author of the book Invest to Win. Gordon has noticed an interesting phenomenon in the movements of the overall stock market which he relates to the 12-month holding period for long term capital gains taxes.

If an investor holds a share of stock or other investable asset for more than a year, and has a profit, then the income tax owed on that profit is at a lower rate than for ordinary income. So an investor has at least some incentive to hang onto a winning trade until the 366th day after entering that trade.

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