Not sure TLH was worth it

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Chip Shot
Posts: 109
Joined: Tue Apr 30, 2019 5:42 am

Not sure TLH was worth it

Post by Chip Shot »

Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage. Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.

I am not seeing the benefit here... Am I missing something?
ccf
Posts: 270
Joined: Mon Mar 09, 2015 9:13 pm

Re: Not sure TLH was worth it

Post by ccf »

Chip Shot wrote: Fri Nov 13, 2020 6:27 pm I am not seeing the benefit here... Am I missing something?
If this bothers you, in the future, you can stick to TLHing into funds that are very similar that you are happy to hold forever (for example, a Fidelity or Schwab total market ETF)
illumination
Posts: 1153
Joined: Tue Apr 02, 2019 6:13 pm

Re: Not sure TLH was worth it

Post by illumination »

Those two funds usually track each other really closely. Over the last 10 years, it's like a .04% difference in the annual growth rate, with the S&P500 slightly outperforming. From Jan 2019 until Nov 2020, the two finds differ by .01%.

I would double check your numbers if you really lost that much (that sounds really high, but I don't know the totals) but historically, the two track each other close enough to where it's a great tax benefit to sell and still have the same market exposure. Writing off $3k a year against your salary in your working years is (usually) an excellent tradeoff for a higher amount for capital gains down the road, hopefully when you retire and may be in a lower bracket.
tibbitts
Posts: 12549
Joined: Tue Feb 27, 2007 6:50 pm

Re: Not sure TLH was worth it

Post by tibbitts »

Chip Shot wrote: Fri Nov 13, 2020 6:27 pm Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage. Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.

I am not seeing the benefit here... Am I missing something?
I can see almost no difference in performance on a ytd chart, and only very slight deviations from days in between. You must have picked the worst possible day to make the exchange, and there was no way that could have been predicted. So in the future do 500 Index plus Extended Market, although if you look hard enough you can probably find some isolated timeframe when that combination would have deviated from Total Stock Market, too.
User avatar
Nicolas
Posts: 2518
Joined: Wed Aug 22, 2012 7:41 am
Location: Ashtabula
Contact:

Re: Not sure TLH was worth it

Post by Nicolas »

I’m surprised you’re seeing a $3K difference unless your portfolio is very large. Can you check whether you’re overlooking any dividends that might’ve been paid to you?
retiredjg
Posts: 42813
Joined: Thu Jan 10, 2008 12:56 pm

Re: Not sure TLH was worth it

Post by retiredjg »

Chip Shot wrote: Fri Nov 13, 2020 6:27 pm Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage. Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.

I am not seeing the benefit here... Am I missing something?
You now hold VFIAX (500 index). You no longer own VTSAX (total stock index).

When you tax loss harvest, it should not be looked at as a short term exchange. It's often long term. You may not be able to TLH back into total stock for weeks, months, years, even decades. If you thought this was supposed to be a short term exchange, you were mistaken. Sometimes you get to make the "round trip", but only if the market keeps going down. That is not what happened for you -the downturn was too short.

You have not lost any kind of advantage. You still have $21k of losses to use over the years and there are no short term cap gains to worry about because you are not going to sell (if you are smart).

If you are worried about not holding the entire market, start buying an extended market index fund to complete your 500 index.

ETA...my answer is so different from the others, I wonder if I'm misunderstanding something.
Last edited by retiredjg on Fri Nov 13, 2020 7:35 pm, edited 1 time in total.
stan1
Posts: 9573
Joined: Mon Oct 08, 2007 4:35 pm

Re: Not sure TLH was worth it

Post by stan1 »

When you TLH you generally don't sell the replacement holding (unless it has a loss again). It is now a core holding in your taxable account. What you have is $21K written off against ordinary income over the next seven years. If you leave this holding to your heirs no capital gains tax will ever be owed (under current law).

Total Stock Market and Index 500 perform almost identically. There is no reason to buy Extended Market Index just to try to replicate Total Stock Market. You can either buy more S&P 500 or Total Stock Market going forward.
tibbitts
Posts: 12549
Joined: Tue Feb 27, 2007 6:50 pm

Re: Not sure TLH was worth it

Post by tibbitts »

stan1 wrote: Fri Nov 13, 2020 7:34 pm Total Stock Market and Index 500 perform almost identically. There is no reason to buy Extended Market Index just to try to replicate Total Stock Market. You can either buy more S&P 500 or Total Stock Market going forward.
I would have said that too (and that's exactly what I did - buy the 500 Index - when I needed a substitute for VTSAX), but to answer the OP's concern, 500 + Extended would have been a much closer match to what he had before than 500 by itself, and may be a superior solution to not doing TLH at all.
UpperNwGuy
Posts: 4584
Joined: Sun Oct 08, 2017 7:16 pm

Re: Not sure TLH was worth it

Post by UpperNwGuy »

I tax loss harvested from VTSAX (Total Stock Market Index) to VFIAX (500 Index) on March 23, and I am happy with the results. I will stay with VFIAX until the market does another significant decline.
User avatar
Stinky
Posts: 6449
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Not sure TLH was worth it

Post by Stinky »

UpperNwGuy wrote: Fri Nov 13, 2020 8:19 pm I tax loss harvested from VTSAX (Total Stock Market Index) to VFIAX (500 Index) on March 23, and I am happy with the results. I will stay with VFIAX until the market does another significant decline.
Interesting. I did the same trade on March 16. I am also happy that I did it.
It's a GREAT day to be alive! - Travis Tritt
jebmke
Posts: 11988
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Not sure TLH was worth it

Post by jebmke »

TLH destinations should always be something you are willing to hold forever. I have holdings I bought in 2009 (March) that I will never sell.
When you discover that you are riding a dead horse, the best strategy is to dismount.
User avatar
bertilak
Posts: 8089
Joined: Tue Aug 02, 2011 5:23 pm
Location: East of the Pecos, West of the Mississippi

Re: Not sure TLH was worth it

Post by bertilak »

Let's compare a $10K investment in VTSAX to VFIAX. The below charts show that you don't appear to have made a mistake. In one year VTSAX wins by a hair. In 10 years VFIAX wins by a hair. Different time periods would give similar "close call" results.

Image

Image
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
User avatar
oncorhynchus
Posts: 171
Joined: Fri May 23, 2014 2:30 pm

Re: Not sure TLH was worth it

Post by oncorhynchus »

FWIW, my TLH partner for VTSAX is VLCAX (Vanguard Large Cap Index Fund Admiral Shares).

Their value of $10000 performance curves over the past 15 years are virtually identical, with CAGRs of 8.84% and 8.97% respectively, and VLCAX's ER is only 0.01% more than VTSAX. To see more than a $3000 difference in performance over 15 years, you'd need to have a market value of over $2.3 million.

o
-- Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime. --
rkhusky
Posts: 10909
Joined: Thu Aug 18, 2011 8:09 pm

Re: Not sure TLH was worth it

Post by rkhusky »

If Total Stock and 500 Index perform identically, then there is no small cap premium.
User avatar
arcticpineapplecorp.
Posts: 7102
Joined: Tue Mar 06, 2012 9:22 pm

Re: Not sure TLH was worth it

Post by arcticpineapplecorp. »

Chip Shot wrote: Fri Nov 13, 2020 6:27 pm Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage. Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.

I am not seeing the benefit here... Am I missing something?
think your numbers are off. The market fell around 30% between jan-March (32% for vtsax and 31% for vfiax).
source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

so if you experienced a $21k loss (don't really know since when as in "when did you originally buy shares?") we can assume you may have had $70k invested (70k X .30 loss = $21k loss).

So now if you tax loss harvested (switched funds on the very bottom) 3/23/2020, the return from 3/23/2020 to now would be:
VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So if you then went from $70k to $49k ($21k loss) between 1/1/2020-3/23/2020 then earning 6.13 on vtsax or 5.73% on vfiax between 3/23/2020 and now would have given you:
VTSAX: $52,003
VFIAX: $51,807

The difference between the two is only $196.

where are you coming up with a $3000 difference between the two?

the return ytd for the two are:
vtsax 13.42%
vfiax 12.74%

that's a difference of 0.68%

on a $90k investment on 1/1/2020 it would now be worth:

vtsax $102,086.64
vfiax $101,466.18

a difference of $620.46 if no change was made.

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

I showed you mine. Now show me yours.
Last edited by arcticpineapplecorp. on Sun Nov 15, 2020 12:08 pm, edited 1 time in total.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Northern Flicker
Posts: 6870
Joined: Fri Apr 10, 2015 12:29 am

Re: Not sure TLH was worth it

Post by Northern Flicker »

Chip Shot wrote: Fri Nov 13, 2020 6:27 pm Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage. Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.

I am not seeing the benefit here... Am I missing something?
Only do a TLH into fund(s) you are happy to hold forever. If it rallies in the first 30 days you hold it, you may be holding it forever. In this case, you could have moved to 80% VFIAX/20% VXF and replicated the performance of vtsax.
Last edited by Northern Flicker on Mon Nov 16, 2020 6:10 pm, edited 1 time in total.
Risk is not a guarantor of return.
User avatar
grabiner
Advisory Board
Posts: 28770
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Not sure TLH was worth it

Post by grabiner »

Chip Shot wrote: Fri Nov 13, 2020 6:27 pm Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage.
Whether the replacement fund rises more or less than the original is random. The more similar your replacement fund is, the less likely there is to be a difference.

I have had this effect in both directions. I often tax loss harvest by selling Fund A to buy Fund B which I already hold but which is not that similar. Fund B is equally likely to underperform or outperform Fund A.
Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.
You don't need to sell the replacement fund, and you certainly shouldn't sell it for a short-term capital gain (unless the gain is offset by capital losses). The benefit of tax loss harvesting is that you deduct the tax on the capital loss now, and pay tax on the capital gain later, at a lower rate (or not at all if you donate the replacement fund to charity or leave it to your heirs)

And my method makes this less of an issue. If I sold Fund A to buy Fund B, and then Fund B went up, I don't need to sell Fund B; I can direct new investments and dividends into Fund A.

(edited to fix quoting)
Last edited by grabiner on Sat Nov 14, 2020 10:59 pm, edited 1 time in total.
Wiki David Grabiner
Gabelli2020
Posts: 51
Joined: Sat Nov 14, 2020 4:01 pm

Re: Not sure TLH was worth it

Post by Gabelli2020 »

My vote is for VFIAX, which I’ve held for 20+ years. Small idiosyncrasies in other “total” market funds that I’ve held that aren’t as tax efficient as VFIAX, likely has to do with efficiency of and turnover of smaller cap holdings.Margin goes to VFIAX, even over SCHWAB S&P because of no capital gains declared.
When I do tax loss harvesting, it’s likely trading out of individual stocks to ETFs or to VFIAX. The Vanguard mutual fund order must be placed by 3:00 PM EST to get that days close, So I’ll often sell at 2:55 PM and then buy Vanguard before 3:00. With ETFs, the trade around time is obviously irrelevant.
AlphaLess
Posts: 2706
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Not sure TLH was worth it

Post by AlphaLess »

Chip Shot wrote: Fri Nov 13, 2020 6:27 pm Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage. Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.

I am not seeing the benefit here... Am I missing something?
1. VTSAX and VFIAX are not exactly equivalent funds. Close enough, not identical,

2. Fact that one outperformed the other is likely random. Could have gone the other way,

3. I would not tax-loss harvest to produce losses that are not off-settable with gains. E.g., in my personal situation, I have short-term capital gains every year. So TLH in situations such as you describe result in immediate tax savings.

In your case, there are no immediate tax savings.

Also, it is good to be precise. So, can you provide some clarifications:

Q1. What date did you sell VTSAX, at what price, and how many shares?
Q2. What date did you buy VFIAX, at what price, and how many shares?
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
nalor511
Posts: 1127
Joined: Mon Jul 27, 2015 1:00 am

Re: Not sure TLH was worth it

Post by nalor511 »

Total market fell more than 500 during covid, and rose more afterward. Overall the performance was similar, but the peak to trough lost 0.94 % more than did 500 at that time. 500 did not rise quite as far back up, right now total market is up about 3% more. So, total difference of 3.94% extra loss and missed gain, if you exchanged from total market to 500 on mar 20.

So if you have $1,000,000 * 3.94% = about 39,400 extra loss and missed gain.
Topic Author
Chip Shot
Posts: 109
Joined: Tue Apr 30, 2019 5:42 am

Re: Not sure TLH was worth it

Post by Chip Shot »

arcticpineapplecorp. wrote: Fri Nov 13, 2020 9:34 pm
Chip Shot wrote: Fri Nov 13, 2020 6:27 pm Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage. Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.

I am not seeing the benefit here... Am I missing something?
think your numbers are off. The market fell around 30% between jan-March (32% for vtsax and 31% for vfiax).
source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

so if you experienced a $21k loss (don't really know since when as in "when did you originally buy shares?") we can assume you may have had $70k invested (70k X .30 loss = $21k loss).

So now if you tax loss harvested (switched funds on the very bottom) 3/23/2020, the return from 3/23/2020 to now would be:
VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So if you then went from $70k to $49k ($21k loss) between 1/1/2020-3/23/2020 then earning 6.13 on vtsax or 5.73% on vfiax between 3/23/2020 and now would have given you:
VTSAX: $52,003
VFIAX: $51,807

The difference between the two is only $196.

where are you coming up with a $3000 difference between the two?

the return ytd for the two are:
vtsax 13.42%
vfiax 12.74%

that's a difference of 0.68%

on a $90k investment on 1/1/2020 it would now be worth:

vtsax $102,086.64
vfiax $101,466.18

a difference of $620.46 if no change was made.

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

I showed you mine. Now show me yours.
Here is the math.
0n 3-19-2020 I sold 1294.313 shares of VTSAX at 57.77 per share. Total $ 74,772 I purchased 338.031 shares of VFIAX at 221.20. Total $74,772
Current VTSAX price= 89.18 for a total of $ 115,427. Current VFIAX price= 331.44 for a total of $ 112,037.
The difference is $3,390, or 2.94%
BogleFan510
Posts: 331
Joined: Tue Aug 04, 2020 2:13 pm

Re: Not sure TLH was worth it

Post by BogleFan510 »

A rounding error on your path to financial independence. I wouldnt sweat it.
Topic Author
Chip Shot
Posts: 109
Joined: Tue Apr 30, 2019 5:42 am

Re: Not sure TLH was worth it

Post by Chip Shot »

The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly
donaldfair71
Posts: 671
Joined: Wed Mar 06, 2013 4:15 pm

Re: Not sure TLH was worth it

Post by donaldfair71 »

Chip Shot wrote: Mon Nov 16, 2020 12:14 pm The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly
For the most part, TLH is a tax-deferral move rather than a tax avoidance move.

That might not be the case if one harvests losses then retires to a very low tax brackets where gains are not taxed (or has any way to get to brackets where gains are not taxed in general).
ivgrivchuck
Posts: 503
Joined: Sun Sep 27, 2020 6:20 pm

Re: Not sure TLH was worth it

Post by ivgrivchuck »

Chip Shot wrote: Mon Nov 16, 2020 12:14 pm The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly
TLH provides too benefits:

1) It moves up to $3000 per year from income taxes into long-term capital gains taxes
2) It helps to defer taxation. Due to inflation, dollar paid tomorrow is less than dollar paid today.
44% VTI | 36% VXUS | 10% I-bonds | 10% EE-bonds
Hyperchicken
Posts: 520
Joined: Mon Mar 02, 2020 5:33 pm

Re: Not sure TLH was worth it

Post by Hyperchicken »

Chip Shot wrote: Mon Nov 16, 2020 12:14 pm The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly
Are these unrealized gains?

This is the whole point of TLH, its very defining feature. You realize losses, and that reduces your cost basis, and that increases your unrealized gains by the amount of realized losses.

Your TLH worked as designed.

The idea now is not to realize these gains for as long as you can.

Also, your numbers still don't add up. If you would have had $11,500 in capital gains, and you realized $21,000 losses, you should now have $32,500 in unrealized capital gains, not $40,000.
retiredjg
Posts: 42813
Joined: Thu Jan 10, 2008 12:56 pm

Re: Not sure TLH was worth it

Post by retiredjg »

Chip Shot wrote: Mon Nov 16, 2020 12:14 pm The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly
You only have $40k in capital gains if you sell. Don't sell. Bank your losses, they carry over from year to year. You can use $3k each year to offset $3k of ordinary income. (It's like a $3k deduction.)
jimmo
Posts: 122
Joined: Sun Mar 03, 2013 11:49 am

Re: Not sure TLH was worth it

Post by jimmo »

ivgrivchuck wrote: Mon Nov 16, 2020 12:28 pm TLH provides too benefits:

1) It moves up to $3000 per year from income taxes into long-term capital gains taxes
2) It helps to defer taxation. Due to inflation, dollar paid tomorrow is less than dollar paid today.
1) No, not necessarily. If I've sold other investments in the same year at a gain, may just be offsetting LT capital gains taxes.
2) Yes, what we can all agree on is that TLH defers taxation. But whether you come out ahead in the long-term is based on the tax code and your tax rate when you ultimately sell.

I think the point being is that TLH isn't some slam-dunk that we should all be doing. It's specific to the individual scenario. There's no one size fits all.
User avatar
simplesimon
Posts: 4014
Joined: Mon Feb 25, 2008 8:53 pm

Re: Not sure TLH was worth it

Post by simplesimon »

The benefit of TLH is going to be the difference between the tax rate you're claiming losses at and the capital gains rate when you realize them. There's not going to be a benefit if these rates are the same e.g. you sell for a loss then later sell again within a year to realize a short term gain.

The gains you have now are unrealized so you won't owe taxes on them, but you're going to have an immediate benefit by claiming losses you did realize when you sold in March.
illumination
Posts: 1153
Joined: Tue Apr 02, 2019 6:13 pm

Re: Not sure TLH was worth it

Post by illumination »

Chip Shot wrote: Mon Nov 16, 2020 12:14 pm The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly
But what was the total "loss" you harvested? Most brokerages should have a running total of your losses or gains for the year.

Getting to apply that temporary loss "now" to your taxes each year is (usually) better, especially since $3,000 of it each year can be applied to your salary that is often taxed higher than capital gains. Plus the time value of money, a dollar today is worth more than a dollar tomorrow.

It's sort of similar to the whole concept of an IRA or 401(k), you get to discount that off your taxes "today" but down the road you have to pay those taxes. But hopefully you will be paying a lower rate down the road.
KlangFool
Posts: 19139
Joined: Sat Oct 11, 2008 12:35 pm

Re: Not sure TLH was worth it

Post by KlangFool »

Chip Shot wrote: Fri Nov 13, 2020 6:27 pm Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage. Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.

I am not seeing the benefit here... Am I missing something?

Chip Shot,


You TLH from VTSAX to VFIAX and generate a 21K loss. Why do you need to sell either VTSAX and/or VFIAX now? If you do not need to sell, how do those capital gain matters to you?


KlangFool
User avatar
arcticpineapplecorp.
Posts: 7102
Joined: Tue Mar 06, 2012 9:22 pm

Re: Not sure TLH was worth it

Post by arcticpineapplecorp. »

Chip Shot wrote: Mon Nov 16, 2020 11:35 am
arcticpineapplecorp. wrote: Fri Nov 13, 2020 9:34 pm
Chip Shot wrote: Fri Nov 13, 2020 6:27 pm Near the bottom of the Covid free fall, I decided to TLH from VTSAX to VFIAX. It was about a 21K loss, so I am looking at claiming 3k per yr for the next 7 yrs as a loss. The problem for this year is that VTSAX has risen by more than the 3K over VFIAX. That wipes out my 3K tax advantage. Also, I now have 35K worth of short term capitol gains to pay taxes on from VFIAX that I wouldn't have had if I would have just rode out VTSAX and not did the tax harvesting.

I am not seeing the benefit here... Am I missing something?
think your numbers are off. The market fell around 30% between jan-March (32% for vtsax and 31% for vfiax).
source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

so if you experienced a $21k loss (don't really know since when as in "when did you originally buy shares?") we can assume you may have had $70k invested (70k X .30 loss = $21k loss).

So now if you tax loss harvested (switched funds on the very bottom) 3/23/2020, the return from 3/23/2020 to now would be:
VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

So if you then went from $70k to $49k ($21k loss) between 1/1/2020-3/23/2020 then earning 6.13 on vtsax or 5.73% on vfiax between 3/23/2020 and now would have given you:
VTSAX: $52,003
VFIAX: $51,807

The difference between the two is only $196.

where are you coming up with a $3000 difference between the two?

the return ytd for the two are:
vtsax 13.42%
vfiax 12.74%

that's a difference of 0.68%

on a $90k investment on 1/1/2020 it would now be worth:

vtsax $102,086.64
vfiax $101,466.18

a difference of $620.46 if no change was made.

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

I showed you mine. Now show me yours.
Here is the math.
0n 3-19-2020 I sold 1294.313 shares of VTSAX at 57.77 per share. Total $ 74,772 I purchased 338.031 shares of VFIAX at 221.20. Total $74,772
Current VTSAX price= 89.18 for a total of $ 115,427. Current VFIAX price= 331.44 for a total of $ 112,037.
The difference is $3,390, or 2.94%
thank you for showing me your math. that tracks so far.

I think the issue is you're looking at the "price" on a growth chart vs looking at the price difference on a "price" chart.

So you're looking at the price difference with dividends reinvested.

If you do that, there's only a difference of 0.5% in performance between vtsax and vfiax from 3/19/20 to now.

but if you look at the difference in price over the same time you find a difference of 4.53%:
NAV change 3/19/20- 11/13/20:
vtsax +54.37%
vfiax +49.84%

here's the "price" chart (showing 4.53% difference in PRICE change over time):

Image

and here's the growth chart (only showing .5% difference):

Image

since I'm assuming you are not reinvesting dividends, you're not accounting for those payments if you're looking at just a price chart (which I think you are).

That being said, you can add the dividends you received in June and Sept but since they weren't reinvested and are sitting in your settlement acct (likely) they haven't juiced the return that you're hoping to have received (by looking at the GROWTH chart) and saying, "Why didn't my vfiax go up as much as vtsax has??" without adding "...if I had reinvested the dividends".

If you'd have reinvested the dividends (not saying you should. I wouldn't have if TLHing) vfiax still underperformed vtsax since 3/19/20, but only by 0.5% (and 0.69% for ytd):

Image

I think the confusion lies between the interpretation of the growth and price charts and how you're looking at one in one case and another in another case. could that be it?

none of this changes the fact that when you TLH you lower your cost basis (to the newly purchases low cost shares) which then makes future gains potentially greater. TLH resets the basis. But tax rates on LTGs are lower than ordinary income so that's a benefit. You can donate appreciated shares and avoid taxation. If you sell shares in future for long term care expenses, medical expenses would lessen tax burden. you could donate to heirs and they get a stepped up basis. And so on. There is benefit. You just have to see them.
Last edited by arcticpineapplecorp. on Mon Nov 16, 2020 1:36 pm, edited 3 times in total.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
KlangFool
Posts: 19139
Joined: Sat Oct 11, 2008 12:35 pm

Re: Not sure TLH was worth it

Post by KlangFool »

Chip Shot wrote: Mon Nov 16, 2020 12:14 pm The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly

Chip Shot,


If you do not sell, those are unrealized capital gains. Why should that matters to you? You could just realize those gain at 0% in the future.


KlangFool
the way
Posts: 423
Joined: Sat Oct 26, 2019 6:00 pm

Re: Not sure TLH was worth it

Post by the way »

arcticpineapplecorp. wrote: Fri Nov 13, 2020 9:34 pm So now if you tax loss harvested (switched funds on the very bottom) 3/23/2020, the return from 3/23/2020 to now would be:
VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
10k to ~16k is a 60% return, not 6%. Your numbers are off by a factor of 10.
MathIsMyWayr
Posts: 2699
Joined: Mon Mar 27, 2017 10:47 pm
Location: CA

Re: Not sure TLH was worth it

Post by MathIsMyWayr »

KlangFool wrote: Mon Nov 16, 2020 1:33 pm
Chip Shot wrote: Mon Nov 16, 2020 12:14 pm The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly

Chip Shot,


If you do not sell, those are unrealized capital gains. Why should that matters to you? You could just realize those gain at 0% in the future.


KlangFool
Actually OP is right. You don't benefit from TLH directly. You just kick the can down the road and hope for a favorable tax situation in the future. It tends to work in most of the cases. It is similar to saving in 401k.
KlangFool
Posts: 19139
Joined: Sat Oct 11, 2008 12:35 pm

Re: Not sure TLH was worth it

Post by KlangFool »

MathIsMyWayr wrote: Mon Nov 16, 2020 1:48 pm
KlangFool wrote: Mon Nov 16, 2020 1:33 pm
Chip Shot wrote: Mon Nov 16, 2020 12:14 pm The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly

Chip Shot,


If you do not sell, those are unrealized capital gains. Why should that matters to you? You could just realize those gain at 0% in the future.


KlangFool
Actually OP is right. You don't benefit from TLH directly. You just kick the can down the road and hope for a favorable tax situation in the future. It tends to work in most of the cases. It is similar to saving in 401k.

MathIsMyWayr,

The difference here is you deduct taxes with the ordinary income tax rate while paying taxes at the long-term capital gain tax rate.


KlangFool
User avatar
arcticpineapplecorp.
Posts: 7102
Joined: Tue Mar 06, 2012 9:22 pm

Re: Not sure TLH was worth it

Post by arcticpineapplecorp. »

the way wrote: Mon Nov 16, 2020 1:39 pm
arcticpineapplecorp. wrote: Fri Nov 13, 2020 9:34 pm So now if you tax loss harvested (switched funds on the very bottom) 3/23/2020, the return from 3/23/2020 to now would be:
VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
10k to ~16k is a 60% return, not 6%. Your numbers are off by a factor of 10.
what numbers? You're saying "10k to 16k is a 60% return". Yes. I never said it wasn't. I said:

VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

not sure where you're coming up with "my numbers" being off by a factor of 10. Which numbers??
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
nalor511
Posts: 1127
Joined: Mon Jul 27, 2015 1:00 am

Re: Not sure TLH was worth it

Post by nalor511 »

arcticpineapplecorp. wrote: Mon Nov 16, 2020 3:19 pm
the way wrote: Mon Nov 16, 2020 1:39 pm
arcticpineapplecorp. wrote: Fri Nov 13, 2020 9:34 pm So now if you tax loss harvested (switched funds on the very bottom) 3/23/2020, the return from 3/23/2020 to now would be:
VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
10k to ~16k is a 60% return, not 6%. Your numbers are off by a factor of 10.
what numbers? You're saying "10k to 16k is a 60% return". Yes. I never said it wasn't. I said:

VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

not sure where you're coming up with "my numbers" being off by a factor of 10. Which numbers??
Because I think maybe you are missing the fact that VTSAX dropped farther from peak-trough, and VFIAX did not climb as high trough-peak. So in this particular trade he missed a slice on both ends (one slice pre-TLH, one slice post-TLH), and you have to add them both together, you don't average them.

I know made this exact trade on 3/20 and my performance loss is almost 10x what you are stating, which matches up with what the other person said.
User avatar
arcticpineapplecorp.
Posts: 7102
Joined: Tue Mar 06, 2012 9:22 pm

Re: Not sure TLH was worth it

Post by arcticpineapplecorp. »

nalor511 wrote: Mon Nov 16, 2020 3:23 pm
arcticpineapplecorp. wrote: Mon Nov 16, 2020 3:19 pm
the way wrote: Mon Nov 16, 2020 1:39 pm
arcticpineapplecorp. wrote: Fri Nov 13, 2020 9:34 pm So now if you tax loss harvested (switched funds on the very bottom) 3/23/2020, the return from 3/23/2020 to now would be:
VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

source:
http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
10k to ~16k is a 60% return, not 6%. Your numbers are off by a factor of 10.
what numbers? You're saying "10k to 16k is a 60% return". Yes. I never said it wasn't. I said:

VTSAX: 6.13%
VFIAX: 5.73%

the difference is 0.4%

not sure where you're coming up with "my numbers" being off by a factor of 10. Which numbers??
Because I think maybe you are missing the fact that VTSAX dropped farther from peak-trough, and VFIAX did not climb as high trough-peak. So in this particular trade he missed a slice on both ends (one slice pre-TLH, one slice post-TLH), and you have to add them both together, you don't average them.

I know made this exact trade on 3/20 and my performance loss is almost 10x what you are stating, which matches up with what the other person said.
ok, i think i get it now.

here's the peak to trough (2/19/20-3/23/20):

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

vtsax lost 34.65%
vfiax lost 33.48%

then from 3/23/2020 (GROWTH chart, with dividends from June and Sept):

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

vtsax went up 61.29%
vfiax went up 57.33%

a difference of 3.97% between the two...which means on an investment that was $74,772 on 3/23/2020 to now the difference would have been $2960.97.

i think the issue is the reinvestment of dividends (or more likely, NOT).

In that, the OP is thinking he lost $3390 but that may be because the dividends received in June and Sept were likely not reinvested and the OP got no growth on that which would have shrank the difference from $3390 to $2960.97.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
nalor511
Posts: 1127
Joined: Mon Jul 27, 2015 1:00 am

Re: Not sure TLH was worth it

Post by nalor511 »

arcticpineapplecorp. wrote: Mon Nov 16, 2020 3:44 pm ok, i think i get it now.

here's the peak to trough (2/19/20-3/23/20):

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

vtsax lost 34.65%
vfiax lost 33.48%

then from 3/23/2020 (GROWTH chart, with dividends from June and Sept):

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

vtsax went up 61.29%
vfiax went up 57.33%

a difference of 3.97% between the two...which means on an investment that was $74,772 on 3/23/2020 to now the difference would have been $2960.97.

i think the issue is the reinvestment of dividends (or more likely, NOT).

In that, the OP is thinking he lost $3390 but that may be because the dividends received in June and Sept were likely not reinvested and the OP got no growth on that which would have shrank the difference from $3390 to $2960.97.
Yeah, so, almost 4% into the ether. Poof.
Kookaburra
Posts: 500
Joined: Thu Apr 02, 2020 11:14 pm

Re: Not sure TLH was worth it

Post by Kookaburra »

Most of the difference was from ... TSLA. Which will be joining the S&P500 soon. Hopefully that squelches the diversion.
cas
Posts: 1059
Joined: Wed Apr 26, 2017 8:41 am

Re: Not sure TLH was worth it

Post by cas »

arcticpineapplecorp. wrote: Mon Nov 16, 2020 1:31 pm
Chip Shot wrote: Mon Nov 16, 2020 11:35 am Here is the math.
0n 3-19-2020 I sold 1294.313 shares of VTSAX at 57.77 per share. Total $ 74,772 I purchased 338.031 shares of VFIAX at 221.20. Total $74,772
Current VTSAX price= 89.18 for a total of $ 115,427. Current VFIAX price= 331.44 for a total of $ 112,037.
The difference is $3,390, or 2.94%
thank you for showing me your math. that tracks so far.

[. . .]

since I'm assuming you are not reinvesting dividends, you're not accounting for those payments if you're looking at just a price chart (which I think you are).

That being said, you can add the dividends you received in June and Sept but since they weren't reinvested and are sitting in your settlement acct (likely) they haven't juiced the return that you're hoping to have received (by looking at the GROWTH chart) and saying, "Why didn't my vfiax go up as much as vtsax has??" without adding "...if I had reinvested the dividends".

[ . . .]

I think the confusion lies between the interpretation of the growth and price charts and how you're looking at one in one case and another in another case. could that be it?
In addition, on the topic of dividends, Morningstar says that

VTSAX distributed its 1st quarter dividend on 3/25/2020, so *after* you sold it.

VFIAX distributed its 1st quarter dividend on 3/9/2020, so *before* you bought the VFIAX shares.

My brain is seizing up trying to figure out the ramifications of that on the math, but ... I'm sure it (along with the issue of whether dividends were reinvested or not) introduces a bit of an "apple and oranges" element to comparing realized VTSAX losses to unrealized VFIAX gains.
User avatar
arcticpineapplecorp.
Posts: 7102
Joined: Tue Mar 06, 2012 9:22 pm

Re: Not sure TLH was worth it

Post by arcticpineapplecorp. »

cas wrote: Tue Nov 17, 2020 6:09 am
arcticpineapplecorp. wrote: Mon Nov 16, 2020 1:31 pm
Chip Shot wrote: Mon Nov 16, 2020 11:35 am Here is the math.
0n 3-19-2020 I sold 1294.313 shares of VTSAX at 57.77 per share. Total $ 74,772 I purchased 338.031 shares of VFIAX at 221.20. Total $74,772
Current VTSAX price= 89.18 for a total of $ 115,427. Current VFIAX price= 331.44 for a total of $ 112,037.
The difference is $3,390, or 2.94%
thank you for showing me your math. that tracks so far.

[. . .]

since I'm assuming you are not reinvesting dividends, you're not accounting for those payments if you're looking at just a price chart (which I think you are).

That being said, you can add the dividends you received in June and Sept but since they weren't reinvested and are sitting in your settlement acct (likely) they haven't juiced the return that you're hoping to have received (by looking at the GROWTH chart) and saying, "Why didn't my vfiax go up as much as vtsax has??" without adding "...if I had reinvested the dividends".

[ . . .]

I think the confusion lies between the interpretation of the growth and price charts and how you're looking at one in one case and another in another case. could that be it?
In addition, on the topic of dividends, Morningstar says that

VTSAX distributed its 1st quarter dividend on 3/25/2020, so *after* you sold it.

VFIAX distributed its 1st quarter dividend on 3/9/2020, so *before* you bought the VFIAX shares.

My brain is seizing up trying to figure out the ramifications of that on the math, but ... I'm sure it (along with the issue of whether dividends were reinvested or not) introduces a bit of an "apple and oranges" element to comparing realized VTSAX losses to unrealized VFIAX gains.
this is a good point and something I noticed as well (which is why I only referenced June and Sept's dividends, but not March's)

dividends would have been received whether the OP had stayed in VTSAX or moved to VFIAX.

but you're right in that the OP did miss out on receiving dividends over one quarter for the year.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
User avatar
grabiner
Advisory Board
Posts: 28770
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Not sure TLH was worth it

Post by grabiner »

cas wrote: Tue Nov 17, 2020 6:09 am In addition, on the topic of dividends, Morningstar says that

VTSAX distributed its 1st quarter dividend on 3/25/2020, so *after* you sold it.

VFIAX distributed its 1st quarter dividend on 3/9/2020, so *before* you bought the VFIAX shares.

My brain is seizing up trying to figure out the ramifications of that on the math, but ... I'm sure it (along with the issue of whether dividends were reinvested or not) introduces a bit of an "apple and oranges" element to comparing realized VTSAX losses to unrealized VFIAX gains.
The dividends mean that you need to use total return numbers to calculate total return. It doesn't matter much where the dividend was reinvested, but it needs to be considered in the returns, since it was a decline in share price but not a loss.

For tax purposes, you came out slightly ahead. If you sell after the dividend, you pay tax on the dividend but have an equal capital loss. Since the capital loss is not deductible this year (you have too much in capital losses for one year), selling after the dividend postpones the tax on the loss. And if you buy before the dividend, you pay tax on the dividend but get no capital-gain benefit until you sell.

Meanwhile, all of these things are trivial. The dividends on these funds are about 0.5% of the fund value, which is $500 if you made a $100K exchange, and the tax on that dividend is $75.
Wiki David Grabiner
the way
Posts: 423
Joined: Sat Oct 26, 2019 6:00 pm

Re: Not sure TLH was worth it

Post by the way »

I think you guys are barking up the wrong tree with the divs. Whether the OP reinvested or not, they'd be the same in both cases. The 2 charts you posted prove that the two funds diverged a bit after he switched over. That's all the OP is saying.

btw, you have the same 10x mistake in your 2nd post (should be 5%):
arcticpineapplecorp. wrote: Mon Nov 16, 2020 1:31 pm
and here's the growth chart (only showing .5% difference):

Image
One more chart, if you squint and put the cursor on 3/19, you'll see that VTSAX had fallen further than VFIAX, but then recovered to be even by the current date. OP simply picked a bad day to TLH and in a sense sold low and bought high(er).

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
international001
Posts: 1765
Joined: Thu Feb 15, 2018 7:31 pm

Re: Not sure TLH was worth it

Post by international001 »

KlangFool wrote: Mon Nov 16, 2020 1:51 pm
MathIsMyWayr wrote: Mon Nov 16, 2020 1:48 pm
KlangFool wrote: Mon Nov 16, 2020 1:33 pm
Chip Shot wrote: Mon Nov 16, 2020 12:14 pm The part that really has me confused is that if I would have kept VTSAX, I would have had $11,500 in capital gains for 2020. Since I did the tax loss harvesting, I now have $40,000 in capital gains.... Doesn't this washout any potential tax savings from TLH?
I am not sure that I understand this correctly

Chip Shot,


If you do not sell, those are unrealized capital gains. Why should that matters to you? You could just realize those gain at 0% in the future.


KlangFool
Actually OP is right. You don't benefit from TLH directly. You just kick the can down the road and hope for a favorable tax situation in the future. It tends to work in most of the cases. It is similar to saving in 401k.

MathIsMyWayr,

The difference here is you deduct taxes with the ordinary income tax rate while paying taxes at the long-term capital gain tax rate.


KlangFool
Some confusion here (I also used to have)

If you can deduct $3k of your ordinary income is nice. If tax brackets go down in the future, is nice
But even if your ordinary income tax bracket was at 15% (same than LTCG), and to remain like this for the ages, it would be beneficial to do TLH
You are postponing paying taxes. So it's like taking a free loan from uncle Sam to invest.
If you don't see it, you can assume some 5% return in a spreadsheet and run all the scenarios.
secondopinion
Posts: 144
Joined: Wed Dec 02, 2020 1:18 pm

Re: Not sure TLH was worth it

Post by secondopinion »

rkhusky wrote: Fri Nov 13, 2020 9:27 pm If Total Stock and 500 Index perform identically, then there is no small cap premium.
Not exactly, has it been long enough to judge that? Small caps have taken more of the hit during 2020. However, some environments let small caps thrive more than larger ones.

The premium probably does exist in a small amount. Even if it does not, there are certain environments where one size of cap will outdo the other.
It is better to be half-wrong than have a 50% chance of being all-wrong. With the former, you will learn and have money to try again. Otherwise, you will never learn and will have nothing eventually.
rkhusky
Posts: 10909
Joined: Thu Aug 18, 2011 8:09 pm

Re: Not sure TLH was worth it

Post by rkhusky »

secondopinion wrote: Fri Dec 11, 2020 4:32 pm
rkhusky wrote: Fri Nov 13, 2020 9:27 pm If Total Stock and 500 Index perform identically, then there is no small cap premium.
Not exactly, has it been long enough to judge that? Small caps have taken more of the hit during 2020. However, some environments let small caps thrive more than larger ones.

The premium probably does exist in a small amount. Even if it does not, there are certain environments where one size of cap will outdo the other.
Actually, my statement is irrefutable. Notice the words “If” and “identically”.
secondopinion
Posts: 144
Joined: Wed Dec 02, 2020 1:18 pm

Re: Not sure TLH was worth it

Post by secondopinion »

rkhusky wrote: Fri Dec 11, 2020 4:52 pm
secondopinion wrote: Fri Dec 11, 2020 4:32 pm
rkhusky wrote: Fri Nov 13, 2020 9:27 pm If Total Stock and 500 Index perform identically, then there is no small cap premium.
Not exactly, has it been long enough to judge that? Small caps have taken more of the hit during 2020. However, some environments let small caps thrive more than larger ones.

The premium probably does exist in a small amount. Even if it does not, there are certain environments where one size of cap will outdo the other.
Actually, my statement is irrefutable. Notice the words “If” and “identically”.
My mistake on understanding the statement; it would imply a lack of premium if that were the case. But I do think that having small-caps has merit regardless of the premium situation (and I still think small-caps have a small premium).
It is better to be half-wrong than have a 50% chance of being all-wrong. With the former, you will learn and have money to try again. Otherwise, you will never learn and will have nothing eventually.
rkhusky
Posts: 10909
Joined: Thu Aug 18, 2011 8:09 pm

Re: Not sure TLH was worth it

Post by rkhusky »

secondopinion wrote: Fri Dec 11, 2020 4:57 pm But I do think that having small-caps has merit regardless of the premium situation (and I still think small-caps have a small premium).
I agree.

Just because TSM has been close to 500 Index recently, doesn’t mean that it will always stay as close.
Post Reply