"What is important from a capital gains tax perspective for a value investor is **not to be afraid to pay taxes**. If you bought a stock at $100 because it was a bargain and the year later the stock goes up to $200, your net gain with a 20% capital gain tax would be $80. Now, some of you wouldn’t sell to keep the $20 in your portfolio and enjoy the dividends coming from the ownership. However, **the opportunity cost of not selling might be much bigger than the $20 you would have to pay in taxes**. Firstly, the stock isn’t a bargain anymore at $200 and could easily drop to $180 or $150, and if you bought it at $100 you probably wouldn’t buy the stock at $200. Secondly, there might be other bargains out there that the market hasn’t yet recognized and keeping the first stock just to save $20 might make you lose $100 or $80 after taxes, on another stock." ([Location 874](https://readwise.io/to_kindle?action=open&asin=B07CNFFJ9J&location=874)) --- **Tags** -- [[quotes]], [[value-investing]], [[dividends]], [[capital-returns]], [[capital-gain-tax]], **Source** -- [[202506221723 - LN - Modern Value Investing]]