RECAP: 2018 FOX Autumn Global Investment Forum

Riding Out the Storm: Tax Loss Harvesting in Volatile Markets 

 

 

 

Presenter:
Paul Bouchey, CFA, Chief Investment Officer, Parametric Portfolio Associates, LLC

Session Description: 

A turbulent market can increase the effectiveness of harvesting tax losses – if you have an active tax-management strategy – and stick to it. This session discussed the market’s uptick in volatility in Q1, why there are loss-harvesting opportunities even in bull markets, and the compounding benefits of tax alpha over time. The speaker discussed the recent tax cuts and shared his views on a tax-aware approach to investing in today’s complex markets.

Key Takeaways: 

  • The speaker reminded us that capital markets were built to off-load risk on a broad set of investors and provide easy capital access, but not necessarily built for investors to earn returns.   

  • While it is always wise to have a tax loss harvest strategy, bear markets with high volatility and dispersion of returns offer the best time to harvest tax losses.  

  • Given low volatilty and dispersion, 2017 was one of the worst years for tax loss harvesting.  

  • In this environment, the speaker likes low volatility defensive stocks that produce good dividends.    

  • When selling and re-purchasing the same stock, beware of the 31-day wash sale rule. 
     

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Session Recaps

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