The hidden cost of trend-chasing
Chasing trends often increases turnover, introduces behavioural bias, and creates unintended tax consequences. Gains realised too early can generate tax liabilities that erode much of the apparent outperformance.
Even when a trend call is directionally correct, taxes can materially reduce the benefit. Tax loss harvesting addresses this blind spot directly.
Turning volatility into a structural advantage
Market volatility is usually framed as a risk. From a tax loss harvesting perspective, volatility can also create opportunity.
Price fluctuations generate unrealised losses even in broadly rising markets. A disciplined process can identify those losses and assess whether they can improve after-tax efficiency - without altering long-term market exposure.
This reframes volatility from something to fear into something that can be systematically analysed.
Rules over reactions
Where trend-based investing reacts to headlines and narratives, tax loss harvesting relies on predefined rules:
- Loss thresholds
- Holding period considerations
- Exposure similarity analysis
A quieter form of compounding
Tax loss harvesting is rarely dramatic. Its value accrues incrementally - through deferred taxes, improved reinvestment capacity, and reduced leakage over time.
In contrast to trend-chasing, which seeks episodic wins, tax loss harvesting aims for structural efficiency. Over long horizons, that efficiency can meaningfully influence outcomes.
