2021-08-16 05:20:27
For those of you wondering if buy and hold is a better long term strategy or is selling at the top and buying back at lower price better. The answer is in this code.
params:
stock_move_up_times1 {integer} how many times stock went up in period 1.
stock_move_up_times2 {integer} how many times stock went up in period 2.
effective_tax_rate_percent {integer} how much tax you would be paying for the sale
position_bigger_percent {integer} if say you sell somewhere and is able to buy back at a x% lower price so you can increase your position by x%.
tl;dr: you should always buy and hold because your initial position gets much bigger over time.
const initial_value = 100
const stock_move_up_times1 = 2
const stock_move_up_times2 = 3
const effective_tax_rate_percent = 22
const position_bigger_percent = 11
// buy and hold
const value1 = initial_value * (stock_move_up_times1 * stock_move_up_times2 - (stock_move_up_times1 * stock_move_up_times2 - 1) * effective_tax_rate_percent / 100)
const value2 = initial_value * stock_move_up_times1 * stock_move_up_times2
const tax2 = initial_value * (stock_move_up_times1 * stock_move_up_times2 - 1) * effective_tax_rate_percent / 100
// sell once in the middle
const value3 = initial_value * (stock_move_up_times1 - (stock_move_up_times1 - 1) * effective_tax_rate_percent / 100) * (1 + position_bigger_percent / 100) * (stock_move_up_times2 - (stock_move_up_times2 - 1) * effective_tax_rate_percent / 100)
const value4 = initial_value * (stock_move_up_times1 - (stock_move_up_times1 - 1) * effective_tax_rate_percent / 100) * (1 + position_bigger_percent / 100) * stock_move_up_times2
const tax4 = initial_value * (1 + position_bigger_percent / 100) * (stock_move_up_times1 - (stock_move_up_times1 - 1) * effective_tax_rate_percent / 100) * ((stock_move_up_times2 - 1) * effective_tax_rate_percent / 100)
console.log({value2, tax2, net: value2 - tax2})
console.log({value4, tax4, net: value4 - tax4})
console.log(value1 > value3 ? 'buy and hold is better' : 'trade is better')
355 views:) Lee, edited 02:20
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