TLH - What Triggers do you use?

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avalpert
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TLH - What Triggers do you use?

Post by avalpert » Sat Apr 12, 2008 5:16 pm

I want to get an understand for what triggers people use to decide to tax loss harvest.

Do you do it anytime you have a loss, is there an absolute dollar number you look for, percentage loss etc.?

livesoft
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Post by livesoft » Sat Apr 12, 2008 7:02 pm

I tax loss harvest no matter what. I will TLH in Nov-Dec if I have losses and I will also TLH any position that is about to become long-term. That is, I always TLH short term losses.

I usually look for a dollar amount of at least $1000 which is usually under 2% of any position of mine. I do not jump in and TLH when something has $1000 loss. I am happy to let the loss sit there (but see mandatory rules in my first paragraph) for a while.

I will TLH on a big down day. That way, my replacment position (e.g. VWO for EEM) has a good chance of going up.

So while I have rules, I also have lee-way.

avalpert
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Helpful

Post by avalpert » Sat Apr 12, 2008 9:33 pm

Livesoft - that's helpful. Do you ever run into issues with Vanguard 60-day reinvest limit?

Any other startegies out there?

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CyberBob
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Post by CyberBob » Sat Apr 12, 2008 9:38 pm

livesoft wrote:That way, my replacment position (e.g. VWO for EEM) has a good chance of going up.
I don't tax-loss-harvest as my positions are all old enough that it would take a depression-like event to make it worthwhile.
But I'm curious of the mechanics of an event like the one quoted above. What would happen when you trade to EEM and then you get several straight years without a loss? Or it never dips below your original purchase price? (not that that would be bad ;)) But are you then stuck forever in an ETF with an expense ratio almost triple that of VWO?

Bob
Last edited by CyberBob on Sat Apr 12, 2008 9:49 pm, edited 1 time in total.

livesoft
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Re: Helpful

Post by livesoft » Sat Apr 12, 2008 9:47 pm

avalpert wrote:Livesoft - that's helpful. Do you ever run into issues with Vanguard 60-day reinvest limit?
Nope because there are none if you read the fine print. Also, I use my WF brokerage account which gives me free trades on ETFs.

livesoft
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Post by livesoft » Sat Apr 12, 2008 9:49 pm

CyberBob wrote:
livesoft wrote:That way, my replacment position (e.g. VWO for EEM) has a good chance of going up.
So what happens when you trade to EEM and then you get several straight years without a loss? Are you then stuck in an ETF with an expense ratio almost triple that of VWO?

Bob
I am not worried about expense ratios that much. VWO didn't even exist when I bought my first big slug of EEM. Neither did VEU for that matter and many other Vanguard funds.

PS: I also do market timing. My VWO is up 10% YTD. How has yours done? :twisted:

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CyberBob
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Post by CyberBob » Sat Apr 12, 2008 9:56 pm

livesoft wrote:I am not worried about expense ratios that much. ...I also do market timing.
Ahh, well if you are jumping back and forth then I guess you are right that the expense ratio isn't that important.
I guess I was really just wondering if an initial, presumably modest, tax-loss-harvest was really worth it in the end if you wound up holding a higher-expense fund for the long-term.

Bob

livesoft
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Post by livesoft » Sat Apr 12, 2008 10:15 pm

How about another example of TLH with low expense ratio funds that I have done: Sell tax-managed international, buy VEU. Then sell VEU and buy a combination of VEA & VWO.

avalpert
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I'm missing it

Post by avalpert » Sat Apr 12, 2008 11:29 pm

Ok, I don't see it. Which small print does it? Are you talking about using etfs?

DblDoc
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Re: I'm missing it

Post by DblDoc » Sun Apr 13, 2008 12:30 am

avalpert wrote:Ok, I don't see it. Which small print does it? Are you talking about using etfs?
Yes. All the examples he has given are ETF's so no trade limits. Just have to watch for potential wash sales.

DD

livesoft
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Re: I'm missing it

Post by livesoft » Sun Apr 13, 2008 6:44 am

avalpert wrote:Ok, I don't see it. Which small print does it? Are you talking about using etfs?
No, wrt 60-day restriction I am not writing about using etfs; I am writing about the standard Vanguard funds.

For example, if you read the fund prospectus supplement for VFINX (S&P500 index fund) you will see on the very first page the "Modification to Vanguard's Frequent Trading Policy for Plan Participants". I imagine all Vanguard fund prospectuses have this on the first page, thus I have to assume you have not read the fund prospectus.

avalpert
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By mail?

Post by avalpert » Sun Apr 13, 2008 10:55 am

You just mean do it by mail? Does the governemnt still even offer mail?

Are you concerned by the lag time in that method?

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