Selling at a loss is usually the worst move. Unless you know this trick.

Everyone knows when you make money on an investment, you owe taxes when you realize the gain.

But the inverse - selling a position that has lost value - creates a tax asset you can use to offset other gains.

Here’s the trick: you don’t only have to harvest losses when your portfolio is down.

If you invest both long and short, you can capture market upside and generate tax losses at the same time.

Example:

• Start with $100 in the market
• Add +$50 long and -$50 short
• Net exposure = $100 (no added market risk)
• Capture the market return plus extra return from going long strong companies and short weak ones

If you had started this in April during the tariff selloff, you could have:

✅ Captured the 30%+ rally

✅ Locked in tax losses to offset future gains

How? As the market rises, the short positions lose value (harvestable losses) while the longs gain value- so your account can grow while generating tax assets.

It’s like real estate depreciation: your property appreciates, but you still get deductions along the way. And with cost seg + bonus depreciation, those deductions can be massive. Similarly, a tax-aware long/short equity account can harvest losses worth up to 90% of the account’s value in year one.

This makes it incredibly powerful if you’re:

• Taking PE carry
• Selling a business
• Managing large portfolio gains
• Diversifying concentrated stock
• Selling appreciated real estate (with depreciation recapture)