facing unexpected capital gains - tax loss harvesting options...

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patient_investor
Posts: 15
Joined: Sat Mar 18, 2017 12:15 pm

Re: facing unexpected capital gains - tax loss harvesting options...

Post by patient_investor » Wed Nov 22, 2017 10:11 am

I was hoping to TLH more than $22K, but the market was going up and up, making it difficult. I guess, I cannot complain either way :)

libralibra
Posts: 214
Joined: Sat Jul 30, 2011 2:01 pm

Re: facing unexpected capital gains - tax loss harvesting options...

Post by libralibra » Wed Nov 22, 2017 3:00 pm

I guess you can do this with no risk by taking a long and short position on the same stock. It's a neutral portfolio, until you sell the loser. Then you hold the risk of the winner dropping before you want to sell or can buy back the offsetting position. You could also buy an ETF and its inverse.

inbox788
Posts: 5483
Joined: Thu Mar 15, 2012 5:24 pm

Re: facing unexpected capital gains - tax loss harvesting options...

Post by inbox788 » Wed Nov 29, 2017 10:12 pm

libralibra wrote:
Wed Nov 22, 2017 3:00 pm
I guess you can do this with no risk by taking a long and short position on the same stock. It's a neutral portfolio, until you sell the loser. Then you hold the risk of the winner dropping before you want to sell or can buy back the offsetting position. You could also buy an ETF and its inverse.
I've looked into these schemes, and while there is potential, it's fraught with risks. First off, the dual opposing positions both require margin, and that margin is better utilized with time in market. Doing so YTD or last 12 months would have missed the 20-30% gains. The fees are also high, and the tracking error is poor so over longer periods of time, another leak. If the funds go nowhere for a long time, you waste it all. And when your target is met, you're left with the awkward remaining fund in a worse and riskier positioning, with a deferment in capitals gains that's hard to eliminate.

Now if you were to try something like this, you may want to consider 2X or 3X ultra funds to increase volatility.

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