If you are day trading, you have to act quickly

— -- A: Looks like you are trying to find the bottom in financial stocks. And your experience shows just how difficult this is.

Certainly, there's something to be said about trying to invest in the banks that will survive this credit crunch. The way the financial rescue mission is proceeding, the largest banks or those that conserved cash while other banks were making bad loans, stand to benefit. If these banks are smart, they will be able to make deals and expand their businesses and balance sheets at great prices by buying weaker banks.

But here's the problem. The situation is fluid, and there is room for disappointment and surprise. Your case is a great example. Back on Oct. 1, your investments were looking like genius. Shares of JP Morgan Chase were up 70% from July 2 and Bank of America's stock was up more than 40%. Those are incredible gains in such a short period of time, the result of investors betting these would be two of the nation's top banks.

But then, in early October, investors got less confident. There were signs the credit crunch was worse than feared. And Bank of America disappointed investors, raising $10 billion by selling additional stock at a lower-than-expected price of $22 a share.

Result: Your enormous gains have all but vanished.

It's a reminder of the dangers of trying to jump in an out of stocks quickly, because it's next to impossible to get the timing just right. And that's especially the case with financials, where the economic climate is unpredictable and it's difficult even for pros. Tax is the least of your problems.

The bottom line: If you're going to daytrade, you need to be prepared to move quickly and lock in gains when you have them, whatever the tax situation. Otherwise, you should pick solid long-term investments you're comfortable hanging onto for many years.