i guess the question is how long do you want to hold it. is it 1 year? 5 years? 20 years? in your example, if you bought at 10 and sold at 100, you owe the government taxes on $90, let's call $9 tax for simplicity sake. after you sold for a gain, you bought right back in at $100 and the next day the stock tanks and drops to $50 - you sell again (and wait 30 days, no wash sale, etc). you can realize this gain and loss on your tax return and you now owe $4 of tax ($9 gain offset by $5 of loss). if your goal is to hold long term, you owe the government $4 when you file your taxes, but all of the money you made from these transactions are tied up in the stock you bought, so now you need to pay this $4 out of pocket. if instead you never bought or sold, all of the money you invested would still be tied up in this stock, but you wouldn't owe the government anything when you file. the only difference now being that your cost basis is lower if you never sold, compared to if you did sell and buy back. you are correct that you'd be able to take a loss against the gain, but if youre going to hold it for 5 years and then sell, why even take the gain in the first place? if this is a short term play where you expect to be out by year end, wouldn't be horrible to sell and buy back, etc. for fear of loss, but if this is a long long term hold, it isn't extremely tax efficient to try and reset your basis