Low taxes tend to result naturally from our policy of cutting losses short and letting gains run, producing realized losses (tax deductible) and unrealized gains (nontaxable). When major stock leadership trends change and gains must be broadly taken, gains tend to be long term (typically a 15% maximum  tax rate).

From the inception of his second managed account in mid April 2004 thru Dec. 31, 2004 (8 months), realized gains (all short term because 8 months since inception) were 16% of total gains and unrealized gains were 84% of total gains.  Taxes reduced first 12-month performance 1.0 percentage point from +17.0% to +16.0%, after deducting all taxes at the maximum marginal rate (39.8%) by 3/31/05.  Taxable accounts received a substantially offsetting tax loss in 2005, despite a 25.1% net gain.

Fees paid are tax deductible as miscellaneous business expenses on Schedule A if such expenses total more than 2% of your adjusted gross income -- subject to the tax advice of your accountant.