Dave wrote:
On Tue, 25 Nov 2008 15:38:10 -0800, "Capt. JG" said:

If the assets are "taken out" and the taxes are paid, then what becomes of
the reduced assets is a loss.

Why? You haven't sold them. Under your theory, no sale, no loss. And what's
with this "reduced assets?" You moved $10,000 in assets, let's say, from
your 401K to a taxable account at your broker's, wrote a check from your
checking account at the bank for the taxes on that $10,000, and continued to
hold the $10,000 in assets in your account at the broker's. No loss, right?
Another way of looking at it is if you must withdraw say 1000 a year
from you 10000 retirement fund to live. Your 1000 is 10% of you
retirement account. If the market drops by half you must now with draw
20% of the account to get the same 1000 required to live. If the market
has historically returned 10% per year the return on the first scenario
will match what you need to live. In the second scenario the return is
only half of the 20% you need to with draw. In this scenario your
retirement fund runs out in less than 10 years. Who is going to support
these people when their retirement is gone.