Mattu's Tax Loss Picks

[WTMHouston]

You are playing with your broker's money.

If you have no cash in the account, then maybe -- at least that is the traditional broker written justification for the rule.

I say "maybe" because the three day settlement rule is little more than brokers playing with our money for three days. It was a lot more reasonable decades ago when it often took three days to get all of the data accumulated.

Today, however, brokers, like banks, have more than enough computing power to settle all trades on the day they occur. That they do not (aside from the rule) gives them the use of our money for the three days.