Tax Gain/Loss Harvesting

It's the end of the year. You're hanging stockings by the fireplace. You have eight investments in your little porfolio. You like all of them, more or less, long-term. But in the next month or three, you don't think much will really happen up or down from here. You're very meh on the market. You have gains in 6 investments of $7,000, $5,000, $3,500, $3,200, $2,200, and $1,000; you have losses of $3,000 and $3,700 in two. What's the plan then?

Well, if you really want to be tax-efficient, then you'll harvest your losses. That is, you'll realize losses, meaning that you'll sell your 2 losers and take a long-term (assuming you held them a year or more, as you did all of these, to keep the problem simple) loss of $6,700. You'll then sell 2 of your winners...the ones that had gains of $3,500 and $3,200. So you fully offset the losses with the gains, and have zero tax incidence, or tax bills, from these transaction. You now have 2 sets of $6,700 or $13,400 to sit out the markets for at least 30 days. (See: Wash Sale Rule.) And then, after that time has passed, you can just go buy exactly what you sold, but now with new tax bases on these investments that will hopefully serve you well in the future.