Charlie Munger eloquent as always

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If one is doing that for tax purposes, I am seriously concerned for their financial acumen. Interactive Brokers has extremely low fees for example. My other trading account is with Ally. I have shorted there before (too tense for my taste, but have at it). Low fees/ no commissions.

Pay the tax. It's a first world problem, but using your 'retirement' account of tax avoidance is...

nevermind.

 

Never use a market order... EVER

 

I trade futures and it's a bit different, but generally yes NEVER use market orders.

 

.... is literally the reason they exist?

 

Good luck. I hope you have a good fallback plan though at least

 

Yeah, I would never want a balanced portfolio of stocks, bonds, mutual funds, ETFs with various strategies to include options. I certainly wouldn’t want to have it in a tax advantaged retirement account. This probably isn’t going to work out.

 

I think there is a misunderstanding here. He believes you are talking about actively trading in a retirement account which is what the original question seemed to be asking. Actively day trading in a retirement account would be the ultimate example of a bad idea.

 

Not understanding the logic here....maybe you guys can help me out.?


Let's start at the beginning....there are 2 choices. If I trade stocks, I can make money or I can lose money.


If i think I will lose money.... the prudent person says "I would be foolish to trade in any account(tax advantaged or not) therefore I won't invest".


The other option is you think you will make money. Therefore, how much can I make after taxes.? Day trading will be short term capital gains. So, 35% federal(marginal) combined with 13% state(Cali) and 4% Obamacare tax....viola you get to keep less than 50% of your expected gains......unless you have it in a tax advantaged account


Not advising to do it.....but I can easily see there are reasons where it MIGHT be appropriate


Kinda like market orders....Lots of volume, 1 cent spread between bid/ask?....let her rip. Had that 1 cent price on a limit order cost me when trying to get a fill over a penny improvement. Then I chased it. There are certainly generalization that work, there are also exception to the rule.


Most advisors say to get risk averse as you near retirement....I contend that might be where you push it up(on the risk spectrum) if you are investing money that you don't logically envision ever needing.


Not trying to pick nits....only offering alternate "logic"

 

why? If you have 5 years til retirement and that will be your main source of income in retirement that’s one thing, but if you have 20, 30, or more years to go, what’s the harm in day trading with a % of that money? I don’t do this but I fail to see why this is “the ultimate example of a bad idea” (assuming you can afford the losses)