Winning by Losing…

No, this is not about winning the battle of the bulge or trimming our waistlines. And yes I know this title may be confusing but in a moment it will all make perfect sense.

The following article was published in the WSJ approximately 2 months ago but at that time our firm was focused on “harvesting” valuable tax losses for our clients, (a service that Conexus Capital Management, LLC provides to our investment management clients at no additional cost) which left little time to distribute this piece by George Mason University Business School’s Prof. Derek Horstmeyer.

But now is the time of the year that 1099s, W-2s, and other tax documents are populating our inboxes and even some mailboxes. Which in turn reminded me that now is the perfect time to touch on this information.

In essence, Dr. Hortsmeyer’s article reiterates what our firm has known and performed for many years. In taxable accounts, offsetting realized capital gains with realized capital losses can boost returns. The referenced article’s analysis not only suggests this to be factual but supports its conclusion with academic rigor. And by the way, for those readers who really want to get granular, an empirical study was performed by professors at MIT and Chapman Universities with the same conclusions.