Reverse Tax Loss Harvest on Really Good Day?

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Doc
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Reverse Tax Loss Harvest on Really Good Day?

Post by Doc » Mon Feb 15, 2016 10:19 am

There have been some opinions that it may be beneficial to Tax Loss Harvesting (TLH) on a Really Bad Day (RBD). Assuming that you have not created a wash sale with your "not nearly identical" replacement shares what are the pros/cons of reversing the position on a Really Good Day (RGD) if

1) Your replacement shares are in a tax advantaged account?

2) You replacement shares are in "cash"?

3) You don't buy on a RGD noway/nohow?

I'm looking for opinions not votes.
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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by livesoft » Mon Feb 15, 2016 10:36 am

I don't see a problem with that.

Sometimes I double-up: Buy in taxable with the cash sometime in the morning on the expectation that equities will be up for the day. Then if equities are up for the day, exchange in tax-advantaged from equities back into bond funds. That way, I might get an extra 0.5% or more for the amount that was overallocated to equities for the day.
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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by Doc » Mon Feb 15, 2016 11:12 am

livesoft wrote:Sometimes I double-up: Buy in taxable with the cash sometime in the morning on the expectation that equities will be up for the day. Then if equities are up for the day, exchange in tax-advantaged from equities back into bond funds. That way, I might get an extra 0.5% or more for the amount that was overallocated to equities for the day.

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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by livesoft » Mon Feb 15, 2016 11:17 am

Also note that cash has been problematic in 2016 since bond funds have done relatively well up through last Thursday.

Since one is apparently going to buy bond funds in the tax-advantaged accounts, one might want to do that on a day that they drop say around 0.5%. I see that last Friday, VBTLX is reported to have gone down 0.46%. It was up about 2.4% this year through last Thursday. Bond funds don't usually go up 2% in a month.
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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by ThankYouJack » Mon Feb 15, 2016 11:29 am

Cons: it takes time and adds complexity for no proven benefit.

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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by livesoft » Mon Feb 15, 2016 11:31 am

ThankYouJack wrote:Cons: it takes time and adds complexity for no proven benefit.

It takes no time whatsoever, adds no complexity, and has a HU-U-UGE proven benefit.
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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by Doc » Mon Feb 15, 2016 11:39 am

livesoft wrote:Also note that cash has been problematic in 2016 since bond funds have done relatively well up through last Thursday.

Since one is apparently going to buy bond funds in the tax-advantaged accounts, ...

The cash/bonds is a temporary 30 day position. It doesn't make much difference.

Recently while TLH I put cash in tax advantaged and TBM in taxable. Ironically I now have a non-trivial STCG in the taxable bond fund which will negate some of the TLH. :annoyed Of course it might have gone the other way if Yellen didn't talk so much.
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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by FillorKill » Mon Feb 15, 2016 11:41 am

Doc wrote:...what are the pros/cons of reversing the position on a Really Good Day (RGD) if

1) Your replacement shares are in a tax advantaged account?

Expanded tax advantaged space, for one. Resetting the next TLH opportunity for another.

Start: 100K VXUS in taxable, 100K cash IRA.

RBD: VXUS -5%. Sell VXUS 5K loss. Buy 95K VEU in IRA [no rebalancing]. Now: taxable 95K cash / IRA 95K VEU cash 5K.

Assuming RGD 31 days later and 95K VEU now 100K.

Option 1 [no rebalance] sell 100K VEU in IRA, buy 95K VXUS taxable. Now: taxable 95K VXUS / IRA 105K cash
Option 2 [rebalance on RGD] sell 95K VEU in IRA, buy 95K VXUS taxable. Now taxable 95K VXUS / IRA 100K cash & 5K VEU.

You would want to reverse the initial TLH if only to have the next TLH opportunity available to you.

Some would rebalance on the RBD (buy 97.5 VEU in IRA) or over-rebalance buy buying more than that which, of course, changes things in obvious ways.

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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by livesoft » Mon Feb 15, 2016 11:49 am

Doc wrote:The cash/bonds is a temporary 30 day position. It doesn't make much difference.

Recently while TLH I put cash in tax advantaged and TBM in taxable. Ironically I now have a non-trivial STCG in the taxable bond fund which will negate some of the TLH. :annoyed

You have confused me with "It doesn't make much difference", even though the difference has been enough to give you a "non-trivial STCG" and to annoy you. :)
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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by Doc » Mon Feb 15, 2016 12:31 pm

livesoft wrote:
Doc wrote:The cash/bonds is a temporary 30 day position. It doesn't make much difference.

Recently while TLH I put cash in tax advantaged and TBM in taxable. Ironically I now have a non-trivial STCG in the taxable bond fund which will negate some of the TLH. :annoyed

You have confused me with "It doesn't make much difference", even though the difference has been enough to give you a "non-trivial STCG" and to annoy you. :)

It only annoyed me in that I could just as easily have put the cash in taxable and the TBM in tax advantaged. I was concerned with premium/discount and bid/ask spread for the equity positions and just ignored the FI location part. My bad but the sun was no longer over the yardarm and I had other things I wanted to do - like visit with the other Jack. :D
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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by livesoft » Mon Feb 15, 2016 12:40 pm

Tomorrow is going to be an interesting day in the stock market. With the Nikkei 225 up more than 7% today, Draghi making good noises, and even China happy, should I buy at the market open and be doubled-up for the day?
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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by Doc » Mon Feb 15, 2016 1:32 pm

livesoft wrote:Tomorrow is going to be an interesting day in the stock market. With the Nikkei 225 up more than 7% today, Draghi making good noises, and even China happy, should I buy at the market open and be doubled-up for the day?


But the Shanghai A Share Index is down 0.6% even then Europe is reacting to Draghi (maybe). And none of them are open after noon New York time so we have no idea of how to treat the "stale" data. I'm glad I did all my Int'l trades last week and don't have to worry about it for 30 days.

Q: Who speaks louder Janet Yellen or Mario Draghi?
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Re: Reverse Tax Loss Harvest on Really Good Day?

Post by tyler_cracker » Mon Feb 15, 2016 4:33 pm

Doc wrote:Q: Who speaks louder Janet Yellen or Mario Draghi?


the thing about Janet is she's always Yellen.

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