Looking back over the last several years, it’s been a great run for PBRG subscribers…

  • The portfolio recommendations in our flagship advisory, The Palm Beach Letter, have an average annual return of over 100% since its April 2011 inception. That’s about 10 times the S&P 500’s average annual return over the same span. (The performance is so good, we had an auditor verify them. PBL subscribers can see the results here.)

  • Longtime Palm Beach Confidential subscribers are sitting on multiple crypto positions with 1,000%-plus returns.

  • Since the debut of Crypto Income Quarterly in December 2018, nearly half of our “dividend”-paying cryptos are yielding double digits… and one is yielding over 100%.

  • So far this year, we’ve closed 30 trades in Teeka Tiwari’s Alpha Edge for a 100% win-rate. This strategy has an annualized return of 24.6% in 2019.

  • And Palm Beach Trader has 25 open positions with an average return of 19.3% this year.

Now, we also launched two new services this year: Palm Beach Venture and Palm Beach Quant. While it’s too early to gauge their performance, we strongly believe they’ll follow suit.

To be fair, we’ve booked some losses along the way, too. After all, no investing strategy is perfect.

Still, subscribers who’ve followed our strategies are sitting on gains this year. But there’s a downside to all this success… The taxman wants his cut as well.

So if you’ve booked large gains this year in your taxable accounts, I’ll share a quick and easy way to offset them with any losses…

Harvest Your Losses

Every time we sell an investment, there’s a tax consequence.

If you have a gain, you owe money. If you have a loss, you might be able to write those losses off. And you can use the offsetting losses to your benefit.

We call this “tax-loss harvesting.” And it can help you instantly recoup a portion of your biggest losses.

Here’s an example…

Let’s say you made $10,000 in a hypothetical trading account this year. You could owe up to $3,700 in taxes depending on your tax bracket.

To cut that down, look at your open positions. Specifically, look at your losers.

As we’ve pointed out before, on average, they underperform winners.

Now, let’s say you have a position with a $10,000 loss. You can book that loss now and it would eliminate the $3,700 tax bill from your gains.

That’s a potential $3,700 going back into your pocket.

If your losses are larger than your gains, you can use the remaining losses to reduce up to $3,000 of your ordinary taxable income. And if you incur any losses above that amount, you can carry them forward.

So by realizing or “harvesting” a loss, you can offset taxes on both gains and income – and optimize your taxes.

What Should You Sell?

Individual stocks are a good starting spot. But you can also harvest other securities, such as ETFs, mutual funds, and closed-end funds (CEFs).

And if you want to find out if you have any losses to harvest, follow these steps:

  • Log in to your brokerage account.

  • Find the “History” or “Statements” section.

  • Click on “Realized Gain/Loss.”

  • Look for your winners and losers.

  • If you have meaningful realized gains, consider selling some losers.

Of course, you’ll need to avoid the “wash-sale” rule. (We covered this rule – and one exception to it – in yesterday’s Daily.)

To recap, the IRS prohibits investors from claiming a tax loss if they repurchase the same or substantially similar security either 30 days before or 30 days after selling a security for a loss.

And remember, this advice is for general purposes only. Each individual’s scenario is different. So we strongly recommend you consult a tax professional before harvesting any losses.

Just know that many investors neglect – or don’t know of – this smart tax technique. Don’t be one of them.

Even if you’re having a winning year in the markets, you can still take advantage of your current losers come tax time.


Grant Wasylik
Analyst, Palm Beach Daily