Skip to content
Archive
← r/stocks
1
100%
u/Long-Tax-133 14 hours ago Advice Request

Would you use a capital-loss carryforward to temporarily liquidate a long-term portfolio ahead of the 2026 midterms?

I have a \~$200k investment portfolio with about $15k in unrealized capital gains. I also have approximately $18k in capital-loss carryforwards from previous years. I’m a long-term investor and ultimately intend to hold essentially the same investments for many years. I’m not looking to permanently exit the market. Because I have the capital-loss carryforward, I’m considering liquidating the portfolio and realizing the \~$15k gain, which should be fully offset by my existing losses. That would leave me with roughly $200k in cash and the opportunity to re-enter the market. The question is how you would handle the re-entry, particularly given the historical tendency for increased volatility/weakness around midterm election years. Would you: 1. Liquidate and immediately buy everything back, simply taking advantage of the tax opportunity? 2. Liquidate and DCA back in over the next 2–3 months, giving yourself some exposure to any potential midterm-related correction? 3. Hold the cash and wait for a significant market decline, while setting a hard deadline to be fully invested before the midterms? 4. Do something else? I’m not trying to predict the exact bottom and I’m not interested in sitting in cash indefinitely. My goal is to remain a long-term investor while potentially using this tax opportunity to reset my position and take advantage of a possible correction before the midterms.
14 comments held Reddit says 0 on reddit ↗
  1. u/Immediate-Run-7085 1 13 hours ago
    \> I’m not trying to predict the exact bottom Everything else in your post says otherwise. Either sell and immediately buy back to use the loss or do nothing.
  2. u/Long-Tax-133 OP 1 13 hours ago
    Instead of predicting the exact bottom, I am wondering if it’s wise to dca maybe weekly but reinvest everything before November (to potentially take advantage of historical down trend pre-midterm).
  3. u/winterrules91 1 13 hours ago
    Sell CSPs to re-enter positions at prices you want
  4. u/cdude 1 13 hours ago
    Have you considered the LTCG rate versus your current ordinary income marginal rate? It's probably worth more to offset your ordinary income instead. It's only $18k so it won't take long to use it all up. Otherwise if you just want to harvest gains, sell and immediately re-buy.
  5. u/Urselff 1 13 hours ago
    People are going to sell, and then the market will go up without them.
  6. u/fairlyaveragetrader 1 13 hours ago
    Are you just going to index? If you're going to play historic probabilities you could always go half in after you do this, give yourself between now and the end of October to get the other half in. If the market is either higher or basically flat by the end of October you're all in playing seasonals The other thing you could consider are some of the stocks on sale and every quarter there is something. Right now it's fast food and some tech. Individual stocks carry individual risk though
  7. u/wearelev 1 13 hours ago
    Why bottom? Historically stock market actually performed very strongly after mid term elections. There was a study, you can Google it that showed S&P 500 gaining something like 18% in the 12 month after midterms on average vs 10% in a normal year.
  8. u/Long-Tax-133 OP 1 13 hours ago
    My plan is to get back all in before November. Since historically there is a drop in the market before midterms, I am wondering if I should take advantage of that or just buy back immediately and hold
  9. u/wearelev 1 12 hours ago
    You can not time markets. It's a fools errand. I would just stay invested. If you want to rebalance your portfolio and do some tax harvesting do it any time you want.
  10. u/EnergyOwn6800 1 13 hours ago
    You are essentially asking people to predict if the market will crash. No one can accurately predict that. Statistically speaking time in beats timing the market. But things are more volatile than usual. You could sell and the market just keeps going up and you miss the train.
  11. u/knobs2409 1 12 hours ago
    I just did the opposite I have $30,000 in realized gains from swing trading and I just dumped $200,000 in at ath. If there is a midterm correction coming I’m hoping to offset my realized gains with some tax loss harvesting.
  12. u/Original-Poet1825 1 12 hours ago
    So you plan on timing the market? I personally wouldn’t do any of it.
  13. u/Nuclear_N 1 12 hours ago
    The thing with timing the market is you have to be right twice. I have a hard time being right once.
  14. u/TRS398 1 11 hours ago
    What country are you in? In some countries, selling and then re-buying essentially the same stocks for the purposes of CGT minimisation would be considered tax avoidance.