Bear Market ahead! How much of a stock market crash can you handle mentally? (judgement, trading)
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As I said, don't TLH unless you have good grasp on your tax situation. I feel like I do, so I use it, as do a lot of other people.
Betterment and other robo type investing platforms perform TLH automatically unless that feature is disabled by the user. Whether they should be doing TLH or not is for others to debate, but when I was using that service during the 1 year I tried it, that service did the TLH automatically.
As I said, don't TLH unless you have good grasp on your tax situation. I feel like I do, so I use it, as do a lot of other people.
I have a great grasp on my tax situation however what I don't have an you don't either is a great grasp a decade or multiple down the road. And just because a lot of other people do something doesn't alone make it a good move. It can work and I understand the math however there is less benefit than most think and there are downsides to it as well of which most who do it either don't know or won't recognize
Someone is always predicting the next big bull market (where we're all going to strike it rich), or the next big bear market (where we're all going to crash and burn). Invariably, someone is always (sort of) right and someone else is always (sort of wrong). IMO, the key is not to be in a financial position where a sudden bear or bull market would wipe-out one's savings and severely impact one's life and future financial picture. Some do this through consistent averaging; others by adopting a severe risk/gain-limited portfolio.
I probably lean further to the conservative side (retired) than others (younger with more recovery time), but, generally try to avoid worrying about what the stock market is doing. To me, that kind of nagging worry is an indication that one is over-invested beyond one's risk tolerance and/or ability to recover from a major hit. I prefer to live without depending on what other people are doing or not doing to determine my life's decisions.
I'm not sure what the IRS definition of substantially identical but never the less I don't know that tlh has the benefit to take a chance of the IRS deeming it to be an issue
Well I don't know what tax rates will be next year or 10 or 30 but I do know if you take a loss and buy back in, if successful you have created a larger unrealized gain than you would otherwise have. Larger gains on their own could push your taxes and unwanted directions
This is a good quick read before anyone starts tlh
" In today’s world of pooled investment vehicles, the lines have blurred a bit, and it’s less clear about what exactly constitutes an investment that is not “substantially similar” – selling a large-cap index and buying a small-cap index would almost certainly be fine, but it’s less clear in the case of selling a large-cap index like the S&P 500 and buying a total market index instead, given that the returns of both will be dominated by the same set of (cap-weighted) stocks.
The reason why this matters is that if the investment results are too different – even just for a period of 30 days – there’s a risk that the entire 13 basis points of economic value for harvesting the loss will be potentially lost by return differences as the temporary new investment fails to track the original investment effectively"
as far as how close can you go without the wash sale trigger ?
I have a great grasp on my tax situation however what I don't have an you don't either is a great grasp a decade or multiple down the road. And just because a lot of other people do something doesn't alone make it a good move. It can work and I understand the math however there is less benefit than most think and there are downsides to it as well of which most who do it either don't know or won't recognize
You can say the same thing about anything in investing. A lot of people here love dividends but they don't know if QDs are going to be taxed at a higher rate some day. Decisions we make are based mostly on what we know now since none of us know the future. I do know that my reliance on capital gains is much higher now than it will be in 5 years. I am confident that the Republicans aren't going to raise LTCG rate in that time, so for me the gains out-weigh the worries about things I don't know. I will take a free loan from the IRS. I might never have to pay it back.
as i always point out 2008 was a one time freak event for many bond funds sustaining heavy losses from "safe paper " . no different than my money market went belly up and i lost some money in 2008 .
it was a situation caused by what was supposed to be safe cdo's that were marketed with a new marketing twist and failed at it . . they are long gone .
i would never judge any bond fund by 2008-2009 .
the op is banned it looks like so i would not address answers to them .
And didn't certain amount of the fall in stocks and bonds come once people really started to panic and hedge funds were forced to sell to pay out investors---
They had to have cash and selling into a free fall market was their only option--
There was no way to "borrow" money on shares losing value by the hour...
That was a buying opportunity that most people didn't value for what it was...
And didn't certain amount of the fall in stocks and bonds come once people really started to panic and hedge funds were forced to sell to pay out investors---
They had to have cash and selling into a free fall market was their only option--
There was no way to "borrow" money on shares losing value by the hour...
That was a buying opportunity that most people didn't value for what it was...
The brokerage firms forced selling in the tech stocks in April 2000. They raised margin requirements on many of the stocks. This occurred after stocks had wild gyrations after a brief dip in January. Many stocks had risen 10-fold in one month. They were mostly small biotechs. The popular meme was that earnings sucked so investors should buy stocks without earnings and bid them up. There were other similar crazy ideas floated in the media. They had financial advisors coming on CNBC and telling people to leverage up on margin. As long as you had 6-months expenses covered by the free credit balance in your margin account, you were supposedly a savvy investor.
The later selling in the bear market occurred after the techs and telecoms ran out of money. Late in the bubble, some had pledged the securities from their IPOs for loans from their suppliers. The crash took down many of the suppliers as well as their clients. There was also forced selling by financial firms who held the bonds issued by the telecoms. It was very similar to 2007.
So, it took 18 months but here we are. How much loss can you tolerate? I'm out of the market for now so I am not willing to tolerate much!!
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