v2.28 - Wall Street’s Hottest Trade Is Losing Money (On Purpose)

The Wall Street Journal is calling a new kind of tax-loss harvesting the hottest trade on Wall Street – funds built to deliver index-like returns with a smaller tax bill. Dustin and Adam read the coverage and land on a simpler summary: tax-loss harvesting only works when you lose money. They walk through the mechanics – sell the losers, realize the losses, offset the gains on your winners – and why fund managers are now assembling portfolios designed to produce losses on purpose, since a rising market makes losers hard to find. Stock market tax-loss harvesting contrasts sharply with real estate and oil and gas. Depreciation is a paper loss: a deduction with no money actually leaving your account. It’s how investors can collect cash flow yet still take a sizable tax deduction. If the stock market is your entire investing universe, tax-loss harvesting is a fair tool. But step outside it, and there are tax strategies that don’t require losing money first. Episode Release Notes & Resources: • [WSJ]: Stock Gains Without All the Taxes? How the Hottest Trade on Wall Street Works - https://www.wsj.com/finance/investing... Key Timestamps: 00:00:00 Intro 00:03:52 The WSJ's "hottest trade" article 00:05:11 What tax-loss harvesting is 00:07:09 "It just means you lost money" 00:08:12 No losses, no tax benefit 00:09:37 Donations as another offset 00:10:48 Funds designed to manufacture losses 00:12:23 Stepping outside the stock market 00:13:42 Real estate private credit: cash flow + deductions 00:16:08 Why your CPA needs to know this space See all Wealth Independence episodes at https://wealthindependencepod.com Connect with Dustin: Big Spring Capital: https://bigspringcap.com LinkedIn:   / thedustinbailey   Twitter/X: https://x.com/TheDustinBailey Connect with Adam: Bidwell Capital: https://bidwellcapitalfund.com