What's the point of of a LT Capital Gain?

[Grieve]

I did get a dividend at the same time.

Just seems odd to me, that I have to pay tax on something I made no money off of....I understand taxing the dividend, but why tax what is really just a reassignment of stock price? I basically just own a greater number of diluted shares.

What really sucks is when you buy a fund at $100 a share, then it drops to $50 a share (e.g. 2008), but you still have to pay up for a big cap gains payout. It based on whether they sell a holding, not whether you made money on the fund itself.

For example, they buy AAPL at $100 in 2008. Apple rises to $700. You buy the fund at its peak, for $50 a share. There's a market selloff, and AAPL falls to $400 and the fund falls to $25. Because of redemptions, they decide to sell their AAPL to raise cash. Even though your fund shares already halved in value, you still get a cap gains payout on the AAPL sale (which they made $300 per share on) and have to pay tax on it.

Not a problem if your funds are in an IRA or 401k, of course.