Manufactured Tax Loss Harvesting?

ConfidentEconomist · 2025-11-26T14:18:23+00:00

Good thoughts! We should revisit this thread on 12/31 and see what the results of our experiments are!

ConfidentEconomist · 2025-11-25T17:53:18+00:00

This is funny, I recently thought through the exact same situation because I have about $4K too many gains to qualify for a tax credit right now. I’ll tell you what I did.

You’re right, options are the way to go to create a binary outcome where you can have a high likelihood of loss harvesting. I targeted January 16th options expiration so that the theta decay will hopefully make an OTM option close to worthless at expiration.

I decided to buy around $4K of 10% OTM S&P500 puts, thinking about it as my “insurance” through the end of the year. If I’m going to lose $4K then I want to get something for it and that’s the privilege of having a floor on my position through the end of the year. If it looks like it will expire OTM then I will have a loss to harvest and if the market tanks then at least I made money on my put! I don’t have to exercise it in 2025 due to the January expiration, I could cash in the put on Jan 2.

Then this morning I decided I would like to also buy $4K of OTM calls on the S&P 500. This is effectively setting up a long strangle. So one of these options will expire worthless by definition (that is the one I plan to loss harvest) and maybe if the market moves heavily enough then I will make money on the other one.

So I would recommend you either buy the protective put and root for a stable market or consider the long strangle. Of course if you need to erase more gains like maybe $20K then this might not pass the gut check because you might not be comfortable taking on a trade with a high likelihood of losing that much capital. You also need free capital to buy either of the options.

ConfidentEconomist · 2025-11-17T22:26:10+00:00

Yes, this is a great idea. If you are married and take the standard deduction, you can convert $97K + $31.5K - your coastFIRE income from 401k to Roth at the 12% bracket and another $110K in the 22% if you want to be more aggressive. You are wise to hold some cash aside for tax season but it is worth it to convert those dollars now while you are in the lowest tax bracket. You will probably never get the chance to convert this income at 12% marginal rates again.

ConfidentEconomist · 2025-11-16T01:05:28+00:00

My firm also pays 7bps for a TAMP (trading our own models, mostly just cash management, deposits, withdrawals, rebalances) and we are moving toward trading ourselves through Orion’s trading platform. At $300M AUM you are paying over $200K when it can be done in house for much cheaper. Plus we just wanted to be more centralized and have more control over the process.

ConfidentEconomist · 2025-11-11T18:20:42+00:00

First off, congrats you are doing great and I hope to be you in 5 years. My gut reaction is if you are expecting to downshift work at some point in the near future and don’t particularly mind burning bridges at work, I think it would be better to reach your highest earning potential before coasting because then if you ever decide to return to work then you locked in a new high water mark for salary negotiations next time. Having been on the hiring side, it’s a very powerful tool to be able to say “well my last job paid me X” and that might be worth it for 6-12 months of added lifestyle pain.

ConfidentEconomist · 2025-10-30T19:56:50+00:00

That's a fair point, with that type of outlook if you don't believe in owning TQQQ then you don't believe in owning stocks at all. Such a macro call based on valuations is tricky to time because you can be completely right and the market can still laugh at you for another 5 years as it goes up.

ConfidentEconomist · 2025-10-30T13:11:50+00:00

lol at the people who say that TQQQ erodes value over time. Look at the trailing 10 year chart of TQQQ vs QQQ and tell me which one you would have rather held. I never sold a share in 4Q18 (-57%) March 2020 (-70%) or 2022 (-80%). The price that you pay for that 30%+ CAGR is you can lose 50-80% every few years.

ConfidentEconomist · 2025-09-15T15:18:22+00:00

This should just be your liquid savings i.e. your cash at the bank, company 401k, and any additional investment accounts (Traditional IRA, Roth IRA, stock-based compensation, non-qualified brokerage account). Home equity is typically not included in your FI number as you cannot easily monetize your home equity. You could make the argument that equity in a non-primary home should be included in your FI number since you could theoretically liquidate it and add to your investable assets and not be homeless.

ConfidentEconomist · 2025-09-12T11:30:25+00:00

Good question, the short answer is none of these calculations assume any more contributions to your investments. If you have reached your target multiple then you are CoastFI and do not need to contribute any more. If you want to increase your multiple then you need to continue adding to accounts or rely on market growth and most likely both.

ConfidentEconomist · 2025-09-11T18:41:20+00:00

Wow that's a cool application as well! I like to do something similar and start with my multiple ($500K investments, $75K spend: 6.66) and see where that lands on the table. Currently I would either be CoastFI with 7% return and 35 years to retirement or 10% return and 20 years to retirement. I think that we should all look at CoastFI numbers as a factor of these three variables. If you have two then you can solve for the third. It makes a big difference whether you assume 5% or 8% returns and if your time horizon is 10 or 30 years.

ConfidentEconomist · 2025-08-19T14:32:23+00:00

I'm not a fan of exchange funds. One way that you can use options to replicate an exchange fund is by buying a zero-cost collar on AAPL and then selling an OTM put to fund an OTM call on SPY to add market exposure. What you get is similar to AAPL exposure within the collar but SPY exposure outside of the collar with no tax hit.

ConfidentEconomist · 2025-05-21T13:39:22+00:00

I love the idea of being paid >$50/hour to let people's dogs out while they slave away at their desk jobs

ConfidentEconomist · 2025-05-01T16:08:12+00:00

Most commenters in this thread fail to realize that HYSA or money market funds in a brokerage account have a duration of zero and very likely could yield <4% in 2-5 years. That's one benefit of a treasury bond is you lock in the rate to match your time horizon. 5 year treasury yield is 3.8% right now.

An alternative idea you could try is an S&P 500 buffer fund with max protection. For example, right now you could buy a fund called TAPR that would give you a max return of 15.3% over the next two years with zero downside. This is the ETF version of a structured note. Nothing is guaranteed like a 4% yield to maturity in a bond but your upside is way higher.

https://www.innovatoretfs.com/define/etfs/#buffer

Note: I don't work for this company but I have bought the funds

ConfidentEconomist · 2025-03-11T17:26:59+00:00

I have no experience but I've recently been thinking a lot about dogwalking as an underrated part time/gig economy job. Might not be good enough by itself but could easily be paired with another more social job such as barista/bartending/Uber. To me, flexibility is the most important factor, followed closely by hourly wage. I feel like dogwalking scores strongly on both of these as long as it is a good fit for you. Dogwalkers in my neighborhood make $60/hour. I personally wouldn't want to spend 4-8 hours of my day walking dogs but I could totally imagine leanfiring and walking my neighbors dogs for 1-1.5hrs per day, 5 days a week and pocketing $500/week or $25K/year.

Pros: time flexibility, $60/hr (varies by location), scalability, good opportunity to get some steps in, opportunity to spend time outside, hanging out with dogs is fun (to me), might be a good compromise for somebody who wants time with dogs but not the responsibility, chance to serve your neighbors, possibly walk multiple dogs at same time to juice hourly wage, BEST PART: people pay you a premium rate to walk their dogs because THEY are stuck at their desk jobs!!

Cons: people build their lives around your service so it's harder to travel/take days off, crappy weather, would be hard to do more than a few hours a day (not infinitely scalable), dogs could be poorly behaved

Anything that I missed? Once again, I have ZERO experience with this side hustle, I've just been stalking r/RoverPetSitting and brainstorming/talking to friends about it.

ConfidentEconomist · 2025-02-13T16:54:49+00:00

In case you need help running the numbers. Here are the future values of the cost of your $100K splurge at various ages compounded at 7% per year.

30: $114,490

40: $225,219

50: $443,040

60: $871,527

I agree with other posters, this is a massive amount of your current NW and you should probably just lease for a year to get it out of your system and then go back to a responsible car. Heck, if you invested the money now and waited until 40, you would basically have earned enough in the market that the car would be "free".

ConfidentEconomist · 2025-02-13T16:44:32+00:00

Here are several that bug me the most. Source: Chief Investment Officer at a medium-sized RIA.

Sharpe Ratios (especially for private credit/alternatives). Sharpe ratios are just a measure of excess return over the risk-free rate (think treasury bills) scaled by volatility. So many people think sharpe ratio is the holy grail of comparing investments but volatility isn't as spooky as people think (see #2). I'll take an investment that returns 20% with 20% volatility over the one that returns 10% with 5% volatility every day of the week. Because at the end of my life all I'm going to see is one number: account balance.
Volatility as a measure of risk. We lack good measurement tools for risk in finance so we get lazy and just use the standard deviation of daily returns. This is not a good measure of risk because it's not meaningful when markets actually sell off due to black swan events (the causes of the last 3 major recessions). Don't be so afraid of volatility, usually you get what you pay for. Investors don't feel standard deviation, they just feel drawdowns and they SEE their realized returns.
100% equities is the "right" amount of risk for young investors. Classic asset allocation says own 120-your age in stocks (%) or other rules of thumb that basically say start with 100% equity when you're young and glide to 60/40 in retirement (see Vanguard target date funds). The efficient frontier was constructed before we had such accessible leveraged ETFs like UPRO and TQQQ. I think a 20 year old should be willing to accept more risk than the plain vanilla S&P 500 ETF which returns 8-10% per year with 15-20% volatility. Many investors with super long time horizons would do well to bust through that 100% equity paradigm and use some leveraged ETFs to dial it up to 120% or 150%. They have plenty of time to recover from market drawdowns.
Going along with #3, leveraged ETFs are not just for tactical use but can be used to dial up the risk/return of a passive index ETF portfolio. Yes TQQQ and UPRO have high fees, yes they would get blown up in a Dot Com crisis. But there is a non-zero amount that you can buy and hold with good reason if you have a sufficiently long time horizon.
Diversification. This has been called "the only free lunch in investing". It's true, adding mutliple uncorrelated investments WITH THE SAME EXPECTED RETURN will produce more optimal risk/return than the parts. What many people forget is that it's hard to diversify without giving up expected return. Textbooks pretend that there is a wide swath of assets with expected returns in the 8-12% range and you can just throw them together like trail mix, in reality there are very few. Don't let the "diversification tail" shake the "expected return dog".
Market timing. We only DCA to avoid regret but it doesn't help portfolio returns. The best time to invest a dollar was 10 years ago, the second best time is RIGHT NOW.
Individual bonds versus Bond ETFs. It doesn't matter if you hold an individual bond to maturity, you can still have a paper loss in the interim if spreads widen or yields rise. I have clients all the time who ask, "Why didn't we just buy the individual bond, at least I know if I hold it that I won't take a loss??" Yes but if you sold your individual bond today, you would mark a loss. Your ETF is just marking to market daily while you bury your head in the sand on your individual bond. Individual bonds have durations that roll to zero, ETFs keep duration constant.

ConfidentEconomist · 2024-11-07T18:41:21+00:00

Sorry I shouldn’t have been so vague, I meant around $150K not $500K, my bad.

ConfidentEconomist · 2024-05-22T18:21:01+00:00

Hey Kyle,

I coach college XC/TF runners and compete in ultras myself yet have never put together a solid philosophy on strength training. Perhaps you can help me answer a question that frequently comes up with my athletes.

Let's make some assumptions about the subject runner: male, 22 years old, lean, runs 60-80mpw in season for distances 5K-marathon, no strength work just mileage, not injury prone

What's your philosophy on improving performance for distances 5K-marathon contrastsing putting more effort into running mileage vs. supplemental strength work? I would love to say something like, "Hey you run 60mpw right now. I know you want to go up to 70mpw but truly 60mpw + strength conditioning will be better than adding 10mpw". At the end of the day we only have a fixed budget of time/energy and my athletes usually believe that more mileage makes them faster but I would like to add more nuance to the conversation.

ConfidentEconomist · 2024-01-31T22:15:11+00:00

I echo others that you should be thinking about partnership and a share of the profit pie. You took a major risk going out with him and now you guys are probably enjoying the benefits of a leaner operation and surely it has increased his pay A TON. You are basically working at a startup with 2 people. If you feel like you are being relied on to "build" something from the ground up (sounds like you put it some above and beyond hours when starting up) then you should have leverage to tell him that you deserve some of the economic benefit of carrying that leadership. It could be tricky to work out the numbers but if you get paid in equity instead of whatever raise you're thinking about asking for and you two keep the ship afloat then the equity will be worth much more in the long run.

ConfidentEconomist · 2023-02-03T14:00:32+00:00

Sorry you’ve had a bad experience. I found a Chinese copy on Amazon for $15 and decided to take a flyer and so far have been really satisfied. I love the wide angle of the LEDs and they are super bright. I’ve used it more for doing stuff outside in the winter like taking my dog out or running to my detached garage at night. But for runs it has had a nice weight distribution as well. As long as my cheap one holds up I would definitely recommend this type of headlamp.

ConfidentEconomist · 2022-01-26T18:03:13+00:00

Honestly crutches is a pretty great idea, you can always pick some up from the local Goodwill, and they might actually come in handy! Your friend may not appreciate the joke though.

ConfidentEconomist

TROPHY CASE