I dunno. I wouldn’t actually derive a ton of comfort from switching between one index and a (dare we say?) substantially identical one. Either you get comfortable saying something really formalistic like “the stock of two different corporations is never substantially identical” or “two mutual funds with different advisors are never substantially identical,” or else you make the things really different economically. Whether the underlying index is 0.99 correlated vs 0.97 is the least likely thing to convince the IRS.
In Canada our asset management firms publicly advertise the strategy of switching out baskets of stocks for highly correlated index funds specifically as a tax loss harvesting strategy. I don’t think they’d do this if it was brazenly in opposition to CRA tax rules.
However, they do warn that swapping out an ETF for an other ETF that tracks the same index could be considered transacting in the same security. So it’s pretty nuanced.
Anyway, I wouldn’t try to do it with actual advice from a tax advisors. And that advice costs money, further raising the bar on how material this has to be to make it an effective tactic.
Fidelity website seems pretty definitive that individual stock → ETF containing some of those stocks doesn’t trigger wash sale rule.
“ETFs can be used to avoid the wash sale rule while maintaining a similar investment holding. This is because ETFs typically are an index for a sector or other group of stocks and are not substantially identical to a single stock. For example, if you sell the stock of a drug company, such as Pfizer, Merck, or Johnson & Johnson, at a loss and then buy an ETF that tracks the drug companies, the wash sale rule does not apply.”
This is my opinion as well. I TLH using a total market fund and and s&p 500 fund. They’re correlated enough that it gets the job done, and I think it would be hard for IRS to claim they’re substantially identical.
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I’m >99% sure this is fine.
Gosh, I can’t imagine why fewer young people are having children.
Good jobs report
The long term implication of a declining birth rate is that we will need many millions more young hard-working immigrants to sustain the aging population.
As immigrants pour in and boomers die off, slowly but surely America will evolve into a multicultural liberal paradise!
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Stork market collapsing.
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Do we really need this many people? God forbid we scale back and slow down the destruction of our environment.
Our economic system is basically based on continuous never ending growth, so yes.
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But the economy!
Checking in on Bay Area real estate…here is a charming little starter home. For $1,550 per square foot.
WTF is going on?
https://www.realtor.com/realestateandhomes-detail/106-Jefferson-Dr_Tiburon_CA_94920_M16282-96246
This from Matt Yglesias is really, really great. It’s paywalled, but the summary is:
What I think is that central banks should talk less about inflation and more about stabilizing nominal spending.
In the face of a drought, you want to stabilize nominal spending, which means that inflation will probably rise, but it also might not if it happens to be offset by good news on some other front.
In the face of a huge catastrophe that tanks nominal spending, like a pandemic, you want to catch up with a period of very fast nominal spending growth — even if some of that growth takes the form of inflation.
When the catching up is done, you want to slow that nominal spending back down to a sustainable pace.
The overall idea of the piece is that total nominal spending/income is on trend from pre-pandemic, but the pandemic disrupted the economy’s ability to supply the goods and services that people want (both through direct impact and likely also because the pandemic changed the mix of things that people are demanding). So with demand growing on trend and supply faltering, some of the growth in nominal income shows up as inflation (people bidding up the prices for goods that are undersupplied). The specific choices made about providing fiscal support shouldn’t affect the total amount of nominal spending (which the fed controls), but does affect who’s doing the spending and what they’re spending on, which affects how well supply matches demand.
The other big theme of the piece is that the inflation that people care most about is gas and food, whose prices are largely set on global markets, so particular US decisions are likely less relevant there.
This is not really relevant to your question, but I found it extremely clarifying:
Inflation isn’t good for debtors — but rising nominal income is
You may remember having heard somewhere that inflation is good for debtors, and possibly associate this view with William Jennings Bryan and old-time populists.
And you may wonder, how is it that gasoline or rent getting more expensive helps me pay off my debts? Obviously, the answer is that it does not. So where did this idea come from?
Well, here’s the story. If your pay rises 10% and prices rise 10%, your “real” wage has stayed flat. But if you have a mortgage, car loan, or any other long-duration nominally-specified financial obligation, the scenario with a higher nominal income is much better for you. This is not a big issue in the economy right now, but debt overhang was a huge issue during Barack Obama’s presidency. If we’d had faster nominal wage growth back then, most people would have been better off even if 100% of the faster growth was clawed back by higher consumers prices. The low inflation climate that prevailed at the time meant that anemic nominal wage gains did concentrate into “real” wage growth. But because the real world is nominal, those anemic nominal wage gains meant real difficulty in climbing out of the financial crisis.
The key thing here is that while inflation isn’t good for debtors, it’s also not so bad as to make it actually true that you just need to adjust everything for inflation and it all comes out in the wash. The nominal quantities matter.
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It’s a good deal because next month it will be $1,800 per square foot. If you don’t buy it now you’ll regret it for the rest of your life.
I like that they tried to rent it for a few months before saying “fuck it, just list it at 40% more than we bought it in 2014”
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Imagine having ten thousand dollars a month to spend for accomodations and living in that hole. Lmao.
I saw their living room and I was like “Oh this isn’t bad, they have a reasonable amount of space here,” but then I realized they just had a TV and bookshelves in their garage.
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I mean, that place is walking distance to the water in arguably the most beautiful place in the Bay to live. Of course it is expensive.