Win from Losing

Cash in on underwater stocks

reinvest once again. “By constantly harvesting losses and reinvesting in more promising issues, you will avoid selling winners too soon and holding on to losers too long,” says Jason Hsu, principal at Research Affiliates, an investment firm in Pasadena, California. “Those behavioral tendencies hurt investors’ performance.” A disciplined strategy for taking tax losses will delay taxes on gains and improve your after-tax returns, according to Hsu. “The value of your portfolio may be multiple times the value of a portfolio where no tax losses have been harvested,” he says.

Don’t buy back what you’ve sold. “If you sell a stock or a bond or a fund and buy it back within 30 days, that’s considered a wash sale,” Ochsenschlager says. Your loss won’t count as a tax loss. Instead, you can buy something that’s not substantially identical. If you sell one bank stock, for instance, you can immediately buy another bank stock. If you sell one growth fund at a loss, you can buy another growth fund.

What if you’re selling a stock at a loss but you think the stock still has great prospects? You can sell the stock and immediately buy an exchange-traded fund (ETF) in that industry. Use a discount broker to cut your trading costs.

Say you’re selling a depressed bank stock now. You could use the sales proceeds to buy State Street’s KBW Bank ETF (KBE) right away. This ETF tracks an index of bank stocks so it probably will move in line with the stock you’ve sold. After at least 30 days have passed since you sold your bank stock, you can sell the ETF and go back to your original stock, if it still looks appealing. You’ll have a tax loss you can use and you’ll still have your original holding.

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38 Responses to Win from Losing

  1. Pchelpme says:

    Lately this type of startup has given me more freedom

  2. Adamah Ruach says:

    This is exactly where I am now…

    • Infinitehi4 says:

      I began volunteering and learned I had a greater passion than our regualar volunteers.  At first I didn’t understand what was happening but I soon realized I got great joy when helping others.  So I would say in place of moon lighting I volunteered, now we provided the same services as an exempt organization that partners with other like minded organizations.  So our startup will be my retirement job but one I look forward to really soon.  Thanks so much for the information.

  3. Jerome Espy says:

    Great points. I love the idea of profitable, manageable growth as a goal.

  4. Kristina says:

    Great point regarding having your venture match your complete benefits package from your full time job.   

  5. Sonia Harris says:

    I did some of these tips!!  Glad I was making the correct choice.

  6. Elle Mayo says:

    Although this does not apply to my current situation, you provided, once again, excellent points.   

  7. Rblack45 says:

    sound advice

  8. Eugenewjr says:

    Great idea.

  9. Lylesezed says:

    Thanks, you give me some points to consider on transitioning from my job to my business!

  10. Bobby says:

    Excellent advice.

  11. Quia says:

    Once again, GREAT ADVICE!! It will be a year in Aug that I transitioned to Full-Time Entrepreneur! Best decision that we ever made! My husband left his job, 2 years prior to start our own business, Big Daddy’s BBQ. I hung around my job, because of benefits.  I must admit, Health Insurance and Benefits are A LOT more expensive, but the business is doing AWESOME, and I don’t regret any decisions we’ve made, perfect timing!

  12. Gpragency says:

    This was great information

  13. Md_somers27 says:

    Great insight.  The point about keeping boundary between your business and your job was really important. I also liked the point about calculating your WHOLE package:  your salary plus your insurance and other benefits.  That’s a key step in setting realistic expectations.  Really good advice.

  14. Debra says:

    Very good information today. These classes have been very helpful .

  15. Donna says:

    Starting a new business is not a get rich quick scheme, take something you love doing, develop it into a process of time management, then succeed. What advice! Thanks Alfred.

  16. Aiesha says:

    These tips were great!! Definitely looking into transitioning from job to business. Can’t wait!

  17. I think that these are great tips and I know that in the past I made the mistakes of doing my business on the job. Now, I am fully self-employed and I love it. I hope that more people can join me in the quest to run your own business.

  18. I’m not in the position to be a hybrid. No hire for me in the past 2 years now so that’s why I started my own business, but this is great information.

  19. I’m not in the position to be a hybrid. No hire for me in the past 2 years now so that’s why I started my own business, but this is great information.

  20. Tettcommunitydevelopment says:

    Great information…. I’m learning a lot here at the SBU!!

  21. Mel says:

    Yes it is so hard not to work on your business while you are working for someone else. I had to disclose my business to my company because there was a potential that they could intersect. I do my best to not do business at work and am getting better at it. I keep telling myself that this is the company’s time and not mine so my lunch hour goes very fast because I am working on my side business. Needless to say my evenings and weekends aren’t in slow motion either.

  22. Start your business while working full-time

  23. Oneness4Real says:

    Thank you for sharing vital inormation!
    God Bless

  24. Rhonda Ulmer says:

    Thank you Mr. Alfred for the great tips! Thank you for encouraging me reach my goals!!

  25. I have been blessed to be able to pursue my business part-time while still maintaining my full-time job…thank God

  26. Forleasadon Harper says:

    Thank you for this great information. I will be better prepared for this business venture than the last.

  27. Alicia says:

    thanks. i currently work part time and endeavoring to have a business in fashion design.

  28. Andrea Paige says:

    Thanks for the tips. I am currently “moonlighting” and it is very difficult to balance the two. However, I desire to one day operate my business full-time and I am going to continue to work on it.

  29. Cherry says:

    Thanks for the information. i found it o be quite helpful and a slap on the wrist.

  30. Jay says:

    Good knowledge…

  31. Janarthanan Dakshnamoorthy says:

    Good inputs.

  32. Janarthanan Dakshnamoorthy says:

    Good lesson

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