When we defer paying taxes, we earn a return on funds that will eventually be paid to Uncle Sam. The longer we can keep that money and earn a return on it, the larger our after-tax wealth will be, other things being equal. Sometimes people ask if aggressive, active investment management can make up for the taxes that frequent switching of stocks incur. The data demonstrate that offsetting the resultant higher tax burden is very unlikely. We know of none.
Many companies mature and lose their superior growth in such a long time.
Thus, a tax-unaware manager will have an extremely hard time making up a big tax bite with extra return. It is much smarter to limit the taxes the client must pay by deferring as much capital gains as investment sense allows, and within that constraint, adding as much value as possible through good stock selection. Some published articles have concluded that tax-extremely sensitive investing does not matter much. These articles all have major flaws. Typically, they look at investment results over five, or at most, ten years.