Isn`t it better to sell and then rebuy the same stocks at a lower price?
If you know the market will drop then sell and short.
You should short if you think it's going down instead of creating taxable events.
Losses in shorts (if even allowed by your broker) can be limitless. Never short. You would want to buy put options instead. Options s allow you to bet on any thesis. That's what investing is- betting on a thesis, until the the thesis is no longer supported by enough facts to justify the investment anymore.
Great strategy if you can predict what’s going to happen. This would have been helpful advice 90 days ago.
Because you’re lazy dumb?
You never know if the market will go up or down
If you believe it’s going down. sell. It’s that simple. The faulty logic is what your belief is based on. If you believe you can fly, doesn’t necessarily make it true.
Why HODL? Because we cannot time markets. If you believe in certain stocks/Sector ETFs, these are good times to bring down avg cost basis
Time in the market >> timing the market
Words to live by. Buy and hold. The worst investing move is to try to time the market. Make investments based on solid facts and keep the investment until the facts change significantly, or you simply need the cash.
The market going down is a significant fact change.
You hodl because you believe it's going to drop, but you acknowledge that you actually have no idea, since there are billions of dollars invested in trying to get an idea an understand, and they don't even do it very well.
From what I understand, that could cost you more in taxes than simply taking the loss.
That is mathematically not possible. You are taxed on gains. So the choice is either getting taxed on gains, by up to 50% of your gains, and keeping the other 50% in the worst case scenario, or eating 100% of the loss and recouping maybe 30% of the loss through deductions. It is much better to sell eat the loss and buy at a lower price than to hold and incur a larger loss later. Large losses are problematic because capital loss deductions are limited to $3K/yr. Source - I’m a CPA. You would need to have an extremely complex portfolio and personal legal entity structure to find a scenario where tax loss harvesting makes more money than simply making money.
What about wash sales?