Insider Hints: Capital Appreciation

by David Jenyns on January 21, 2008

An investor interested in capital appreciation is not interested in dividends, but rather in seeing the market price of his stock increase. This represents nearly seven years’ worth of dividends from the $30 stock yielding a conventional 5 percent.

If you hold your investment for more than six months, your profit is considered a long-term capital gain, taxable at a maximum 25 percent rate that is, for many people, a savings over straight-income rates.

The more consistent course is to drop the non-producing stock (losses, if any, are tax deductible) and shop around for a winner. There’s nothing like a couple of growth stocks that don’t grow to take the steam out of a capital-appreciation man.

Capital appreciation, it should be noted, is an omnibus term covering any change or advance in a company’s position, which might be reflected in the market price. Dozens of small companies dealing in electronics, precision equipment, and other fruits of current scientific research (Tracerlab, National Research, Beckman Instruments, etc.) are similarly attracting attention and consequent jumps in price. So capital-appreciation fans, take note.
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