Felix Salmon

Jane Kim is the latest journalist to do a story about day-trading retail investors, and boy has she found some doozies:

The uncertain environment has prompted David Dilley of Bonita Springs, Fla., to trade more frequently. The 76-year-old retiree believes there has been a “sea change” in economic philosophy — shifting from private enterprise to a command-and-control economy. “The long-term market gains that we’ve had in the past will not occur until that reverts and we get back free enterprise,” he says. So, while he had considered himself a longtime buy-and-hold investor, he’s now trading Canadian oil trusts in his E*Trade account several times a week…

Mark Swenson of southern New Hampshire says he typically trades with exchange-traded funds, instead of buying individual stocks. The 40-year-old says he started trading for the first time last October, in part to generate additional income in case his work as a plumber dried up.

Kim does pick up on one interesting incentive to day-trade — or, rather, the lack of an old disincentive:

While short-term investors are likely to face higher tax bills — since short-term gains are taxed at higher rates than long-term gains — he notes that some people who incurred big losses last year will be able to carry those losses forward to offset taxes in future years.

It’s unintuitive, but it makes a certain amount of sense: if you lose a lot of money in one year, then your risk appetite can actually go up, in that you don’t need to pay lots of taxes if you gamble irresponsibly and make lots of short-term gains. So, good luck with those Canadian oil trusts, Mr Dilley!