(Well, we've got to write something).Loss/gain asymmetry, or selling winners and letting losers ride.
They may claim this is to avoid holding too much of a single stock or in order to manage portfolio risk; frequently they are just selling winners.
While subscribers should not be selling winners just because they are up, make sure the valuations and profit prospects of your holdings remain attractive.
A written plan will help you tune out the market's recent bullishness and stick to your long-term allocation by selling winners until you're back on track.
These funds use strategies such as keeping turnover low; selling losers rather than winners; selling winners only after holding them for more than a year; emphasizing long-term holdings so more dividends qualify for the favorable 15% rate; and attracting new investors who dilute the pot of realized gains that have to be distributed.
Some funds are better than others at minimizing tax burdens on their customers, with such strategies as keeping turnover low, selling losers rather than winners, selling winners only after the positions have been held for more than a year, looking for dividends that qualify for the favorable 15% rate, and attracting new investors who dilute the pot of realized gains that have to be distributed.
"The tendency for individual hedge funds or anybody is to sell winners before they sell losers.
Of course, if you sell winners, you may incur a capital gains tax bill.
But unlike tax-loss harvesting, in which you are selling your losers, rebalancing often requires you to sell winners.
They were more inclined to own "value" stocks, for example, and less inclined to sell winners and hang on to their losers.
That means changing little about your portfolio now, unless it's to sell winners to buy more of what is on sale.
