success

REFLECTIONS AND KEY TAKEAWAYS FROM THE BOOK “BRAIN RULES: 12 PRINCIPLES FOR SURVIVING AND THRIVING AT WORK, HOME, AND SCHOOL” BY JOHN MEDINA

Posted on by Joseph M. Brennan Jr.

I thought “Brain Rules: 12 Principles for Surviving and Thriving at Work, Home, and School” by John Medina was a pretty good book. The three key takeaways that I got from this book were the following:

1. While most people view food as the body and brain’s most critical resource (wrong – the body/brain can survive a few weeks without food) and water as the second most common response (wrong again – the body/brain can survive about a few days without water), the most critical resource is oxygen (the body/brain can survive only a few minutes without oxygen). As such, the best way to improve cognitive performance is to enhance the amount of oxygen delivered through the bloodstream. The corollary is also true – anything which reduces the amount of oxygen delivered through the bloodstream will degrade cognitive performance over the near and long term. There are several implications related to this that are worthy of strong consideration:

Will stress improve or reduce blood flow and cognitive performance? Well, over the near term, stress constricts blood vessels resulting in decreased blood flow. Chronic, long term stress results in the scarring of blood vessels and the build-up of plaque due to sticky substances adhering to and hardening the blood vessels – reducing blood flow permanently and raising the risk of strokes and heart attacks (as a side note: stress also depletes the immune system resulting in greater and lengthier illnesses). As such, anything we do to manage stress is very helpful over both the short and long term. Related to the implications of stress, one can imagine several other things which might produce similar effects. For example:

Stimulants such as drugs and even natural stimulants can cause some of the same effects. So, it would probably be wise to minimize these to the extent possible or eliminate them completely.

Depressants tend to slow down the heart and in turn would decrease the flow of oxygen delivered through the bloodstream. So, it would probably be wise to minimize these to the extent possible or eliminate them completely.

Unhealthy foods tend to promote the scarring of blood vessels and the build-up of plaque due to sticky substances adhering to and hardening the blood vessels – reducing blood flow permanently and raising the risk of strokes and heart attacks. So, it would probably be wise to minimize these to the extent possible or eliminate them completely.

There is no shortage of other scenarios we can imagine which could reduce the amount of oxygen delivered through the bloodstream and degrade cognitive performance. So, it’s worthwhile to contemplate these so that we can make healthier choices.

In sharp contrast to the above:

Physical exercise elevates the heart rate and creates new blood vessels deeper into the brain and body tissues resulting in substantial increases of oxygen delivered through the bloodstream. So, it would be wise to exercise regularly.

Doing things to keep yourself in a relaxed state does the opposite of stress in that it improves blood flow and cognitive performance and results in less scarring of blood vessels and the build-up of plaque. As such, anything we do which helps us manage stress and relax more can be very helpful over both the short and long term.

2. From other readings I’ve done, another factor which can come into play involves taking breaks from time to time when you feel mentally depleted and are craving unhealthy foods. The brain tends to chew up a lot of metabolic fuel (glucose and oxygen) but can become depleted over time. When this happens, people tend to get a strong craving for sugar and often give in to that craving. However, what people don’t realize is that even substituting healthier snacks, taking a short break, going for a short walk, performing much easier, low-stress activities (simple tasks, phone calls, etc.) or doing something to relax or uplift your mood would be enough to sustain you during those periods and allow you to get back to the complex tasks at hand. So, give this a try instead of attempting to push through it and giving into unhealthy temptations. You’ll get more done, do them better, and complete things sooner.

3. Sleep is very important. The brain remains active while we sleep. It processes, reviews, and organizes information, strengthens new learning, and performs problem solving activities. If sleep is interrupted, then we lose the benefit of these processes. So, the brain performs offline processing during the sleep cycle. It helps us to learn better, to retain information, and create solutions.

Related to the above, as a life coach, the following is the first step I usually give to people which can really help a lot: https://brighterdayslifecoaching.com/how-to-defeat-any-distress-without-dope-drinks-drugs-debt-or-doctors/

Here are the more complete set of the notes I took which might be helpful to some of you out there:

Of the 12 Brain Rules discussed, I thought the following were the most helpful and enlightening: Rule #1 (Exercise): Exercise boosts brain power, Rule #4 (Attention): We don’t pay attention to boring things, Rule #5 (Short-Term Memory): Repeat to remember, Rule #6 (Long-Term Memory): Remember to repeat, Rule #7 (Sleep): Sleep well, think well.

A lifetime of exercise results in large improvements in cognitive performance. Exercisers outperform sedentary people by a large degree. Couch potatoes can start aerobic exercise programs and improve their cognitive performance within a few months. If they stop the exercise program, then their cognitive performance will revert back to the previous levels. Just walking several times a week is enough to improve cognitive performance. 30 min of aerobic exercise three times a week is sufficient but a much greater cognitive benefit results if a strengthening program is added.

Your lifetime risk of dementia is cut in half (and risk of Alzheimer’s cut by 60%) if you perform aerobic exercise twice a week. If you do a 20 min walk each day you can cut your risk of having a stroke by 57%.

Physical exercise also helps in treating anxiety and depression – both immediately and over the long term.

Exercise provides your body and brain with greater access to oxygen and food. When we exercise, we increase blood flow which makes new blood vessels which penetrate deeper and deeper into the tissues of the body. This allows more access to the bloodstream’s goods and services including food distribution and waste disposal. The more you exercise, the more tissues you can feed and the more toxic waste you can remove. Likewise, exercise increases blood volume in the brain likely through new capillaries which allows more brain cells greater access to the blood’s food and haz-mat teams.

Exercise provides a steady increase in the oxygen supply to the brain which greatly improves cognitive performance. The improved cognitive performance will rapidly decline if the exercise program is stopped. Studies show that providing supplemental oxygen to people without exercise provides a similar cognitive improvement.

Consider incorporating exercise even during work by taking walks, using treadmills, and such.

In summary, exercise boosts brain power. So, to improve thinking performance, move.

The more attention brain pays to a given stimulus, the stronger the information will be encoded. Better attention always equals better learning and retention. It improves accuracy, retention, and clarity in writing, math, and such.

Attentional ability is not capable of multi-tasking. We simply cannot process attention-rich inputs simultaneously.

Studies show that a person who is interrupted takes 50% longer to accomplish a task and up to 50% more errors are made. If a person is familiar with the tasks, the completion time and errors are much less than if the tasks are unfamiliar.

One study showed that simply reaching for an object while driving a car multiplies the risk of a crash or near-crash by 9 times.

The ideal single topic presentation or module of instruction would only last 10 minutes (each of which would only cover a single core concept – always large, always general, always filled with “gist,” and always explainable in one minute – the remaining 9 minutes would provide a detailed description of that single general concept (each detail could be easily traced back to the general concept with minimal intellectual efforts)) So, five topics would take 50 minutes.

The brain processes meaning before detail. So provide the gist or the general ideal first. If you do, you will see a 40% improvement in understanding.

The 10-minute limit is important because audience attention will plummet to near zero right around the 10-minute mark.

The brain doesn’t pay attention to boring things.

Retrieval may best be improved by replicating the conditions surrounding the initial coding. This also goes for mood. Learn something while you are sad and you will recall it better if, at retrieval, you are somehow suddenly made sad.

The quality of the encoding stage – those earliest moments of learning – is one of the single greatest predictors of later learning success. The more handles (associations, etc.) one creates at the moment of learning, the more likely the information is to be accessed at a later date.

The more a learner understands the meaning of the presented information, the stronger the encoding process. So, make sure you understand exactly what that information means and if you are trying to drive information into someone else’s brain, make sure they know what it means. This has a negative corollary. If you don’t know what the information means, don’t try to memorize and pray the meaning will somehow magically reveal itself to you in the future.

A great way to communicate meaning in such a fashion that it improves learning and understanding is to use relevant real-world examples such that main learning points are accompanied with meaningful experiences.

Studies show that the greater the number of examples used, the more likely the information is to be remembered. And the more personal an example, the more richly it becomes encoded and the more readily it is remembered. Why do examples work? They take advantage of the brain’s natural employment of pattern matching. Information is more readily processed if it can be immediately associated with information already present in the learner’s brain. Providing examples is the cognitive equivalent of adding more handles. Providing examples makes the information better encoded and better learned and retrieved.

The events that happen the first time you are exposed to a given information stream play a disproportionately greater role in your ability to accurately retrieve it at a later date.

If you are trying to get information across to someone, your ability to create a compelling introduction may be the more important single factor. You can lose your audience in the first 30 seconds of a presentation if you do not make it compelling and hold their attention.

Memories are not stored as video replications of events. They are stored as fragments. Once one fragment is retrieved then based on inference and the partial evidence available, a reconstruction of what actually experienced is created. So, the accuracy of memories is questionable. Because the mind tends to fill in missing gaps – relying on partial fragments, inferences, outright guesswork, and often (most disturbingly) incorporates other memories not related to the actual event. It is truly reconstructive in nature and done all in the service of creating a coherent story. Frequently, the brain inserts false information to make a coherent story.

Studies show that memories later in life bear very little resemblance to the ones remembered earlier in life. For example, in one study only a third of adults recalled any physical punishment such as spanking – however, 90% of their adolescent selves answered in the affirmative.

The brain tries to make sense of the world by connecting new information to previously encountered information. As such, new information can become intertwined with past memories as if they were encountered together.

Re-exposure strengthens encoding, storage, and retrieval. So, talking about something you witnessed with friends and family and such strengthens memory. Research indicates that thinking about or talking about an event immediately after it happens enhances memory for that event. It is one of the reasons it is important for witnesses to recall information as soon as possible after an event occurred.

It is important to regularly re-expose yourself to information you want to retrieve later. Thus, the way to make long-term memory more reliable is to incorporate new information gradually and repeat it in timed intervals.

Our brains only give us an approximate view of reality, because they mix new information with past memories and store them together as one.

Studies show that 26-45 min naps improve performance by 34% or more lasting more than 6 hours.

Studies indicate that sleep can boost learning substantially. For example, taking a 12 hour break has shown to produce 20% better results. That increases to 60% if it happens after an 8+ hour sleep. And no matter how many times the experiment is run, the sleep group consistently outperforms the non-sleep group about 3 to 1.

Studies show that if healthy 30-year olds are sleep-deprived for six days (averaging about 4 hours of sleep per night) parts of their body chemistry soon revert to that of a 60-year old. And if they are allowed to recover, it will take them about a week to get back to their 30-year old systems.

The bottom line is that sleep loss means mind loss. Sleep loss hurts attention, memory, mood, quantitative skills, logical reasoning ability, and general math knowledge. Eventually, sleep loss affects manual dexterity including motor control.

The brain remains active while we sleep. It processes and reviews and organizes information and new learning. If sleep is interrupted then we lose the benefit of the mental review and organizing processes. So, the mind is performing offline processing during the sleep cycle. It helps us to learn better, to retain information, and create solutions. The brain shows rigorous rhythmic activity when we sleep – perhaps replaying what was learned that day or seeking solutions for problems.

Stress can boost cardiovascular performance in the short term but over the long term, too much adrenaline stops regulating surges in blood pressure which creates sandpaper-like rough spots on the insides of blood vessels. The spots turn into scars which allow sticky substances in the blood to build up – clogging the arteries. If it happens in the blood vessels of your heart, you experience a heart attack. If it happens in your brain, you get a stroke. As such, people who experience chronic stress have an elevated risk of heart attacks and strokes. Chronic stress also affects our immune system which cripples the ability to fight off infections and illness. Studies show that stressed individuals were three times as likely to suffer from the common cold.

Chronic stress hurts our ability to learn. One study showed that adults with high stress levels performed 50% worse on certain cognitive tests (such as problem solving) than adults with low stress.

Stress hormones affect our brain. One of the effects of prolonged stress is depression – the debilitating kind. The kind of depression that causes 800k people a year to attempt suicide. Many people who feel depressed feel there is no way out of their depression and that life’s shocks are permanent and things will never get better. Even when there is a known way out – there is no perception of it.

At some point stress becomes toxic (the allostatic load).

Your home life greatly impacts your abilities and performance outside of the home whether work or school. Because it greatly affects the ability to concentrate and focus as well as physical health. Absenteeism and truancy often results. Those who live in hostile environments (especially children) are at much greater risk of experiencing severe mental health issues such as depression and anxiety. Such mental health problems can wreak havoc on cognitive processes. More stress in the family cause more stress at work which in turn gets brought home again. As such, stability of the home is essential – especially for children.

Under chronic stress, adrenaline creates scars in your blood vessels that can cause a heart attack or stroke, and cortisol damages some of the brain cells, crippling abilities to learn and remember. The worst kind of stress is the feeling of having no control over the problem – you feel helpless.

If information is presented orally, people remember about 10%, tested 72 hours after exposure. That figure goes up to 65% if you add a picture. One reason text is less capable than pictures is the brain sees words as lots of tiny pictures.

Women tend to remember the emotional details. Men typically remember the gist.  

#selfimprovement #selfhelp #selfdevelopment #intention #fulfillment #success #inspiration #happiness #mindfulness #peace

A BREAK IN THE CLOUDS: THE RETURN OF LOW-RISK SAFE HAVEN INVESTMENTS VIA THE BOND MARKET

Posted on by Joseph M. Brennan Jr.

For the first time in nearly 3 years, I am starting to return to the “low-risk, safe haven” bond market and bond fund/ETF investments. I wrote about the risks previously in January/February 2021 (TWO BIG INVESTMENT CONCERNS RIGHT NOW: RISING BOND RATES AND RISING INFLATION | BRIGHTER DAYS LIFE COACHING® and STORM CLOUDS ON THE HORIZON: THE BOND MARKETS AND THE “LOW-RISK SAFE HAVEN” FACADE | BRIGHTER DAYS LIFE COACHING®). Since writing those posts nearly three years ago, longer-term bonds and bond funds/ETFs have dropped 46% which is very unusual for the bond market when considering its longer-term history as a low-risk, safe haven investment – these losses are more typical of a stock market decline than a bond market decline. Due to this outsized drop and other factors, longer-term bonds and bond funds/ETFs have now become very attractive in my opinion – and I will continue buying into them on any future weakness.

Some of the reasons I think longer-term bonds and bond funds/ETFs might be a good investment going forward include the following:

1) The high interest rates (and the corresponding low bond prices since interest rates and prices on bonds are inversely related) is likely to make the United States (and other nations) inclined to provide less fiscal support and/or higher taxation in future years due to the higher cost of servicing debt – inflation would be another contributor to this,

2) The hesitancy of the Federal Reserve to provide as much economic support in the future as they have in the past in terms of interest rate reductions and Quantitative Easing (QE) for buying bonds and such,

3) a deteriorating economy and corporate earnings due to the combination of the above two factors which is likely (at some point) to result in substantial stock market declines and corresponding gains in low-risk, safe haven investments such as bonds and bond funds/ETFs. Much of the gains experienced in the stock market tend to be earnings, economy, and policy related.

These are some of things I’m seeing on the horizon right now. Lots of things to ponder and position for – especially since historical, low-risk, safe haven investments seem to be poised to regain their previous luster in the years to come. As such, perhaps one of the better longer-term investment strategies might be to start buying into longer term bonds and bond funds/ETFs.

For perspective, take a look at the 10-year, 20-year, and 30-year treasury yields (prices move in the opposite direction of yields) which had been falling for 40 about years but are now starting to normalize a bit. The last time they went up consistently was during the 1960s and 1970s but are now starting to rise again.

The bottom line is the prices of bonds and bond funds/ETFs are starting to normalize a bit which means substantial gains could be experienced by bond market and bond fund/ETF investors in the years to come. So, it might be wise to start positioning accordingly.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/).

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow!

#finance #stocks #investing #stockmarket #success #bonds #bondmarket

HOW TO LOSE YOUR SHIRT IN THE STOCK MARKET WITHOUT LOSING YOUR SHORTS TOO (PART FOUR)!

Posted on by Joseph M. Brennan Jr.

It’s always a good idea to adjust your investment strategies over time. Those of you who have been following me closely know that I had a real “knack” back in 2022 for picking losing stocks. However, I refused to let them go and continued buying into them as the buy signals got stronger with every drop, and they became more and more attractive, with respect to all of the indicators I use to make investment decisions. And, as usual, I generally refuse to sell on “buy” signals and frequently do the opposite. I wrote about this back in March and April and didn’t realize at the time that this would become a multi-part series but that is how things played out. Here it is many months later and I am still fighting the downs and ups and downs of what has been a highly volatile stock market over the past year (most of which have been downs). The fight continues but it appears my latest strategies have worked extremely well.

The strategy I used for much of 2022 involved continuing to buy stocks I owned which dropped substantially. However, later in the year I changed this strategy by trying to find new stocks which appeared to be just as attractive and buying those instead. That allowed me to take losses – when sensible to do so on the losing stocks – without invoking the wash sale rule – plus it didn’t allow certain stocks to dominate the performance of my portfolio as much as they had in the past. You can read about my previous strategies and how they evolved throughout 2022 by seeing part one, part two, and part three of this series.

There’s no question about me having a pretty lousy year in 2022 – it was my first down year in 11 years – but sometimes that will happen as an investor. The low point for me was when I was 142% invested (yes – I was using margin) and down 41.19% for 2022. At the end of 2022 I was 96% invested and down 23.6% for the year. So, things improved as the year progressed.

Is there any guarantee a given strategy will work? Of course not. Investing is primarily about making decisions based on various indicators, the associated likelihoods, and employing strategies accordingly. So, at best you can position yourself for a potential favorable return, but there is never a guarantee.

If I had not evolved my techniques and continued using my previous investment strategies, I would have been down 70% by the end of 2022. So, I’m very thankful that I modified my investment strategies throughout the year. As a point of reference, Kathy Wood’s ARKK stock gained 150% back in 2020 (nearly as much as my 164% gain), lost 23% back in 2021 when I had earned an 8.7% gain, and lost 69% in 2022 when I had lost 23.6%. So, I feel pretty good about ending 2022 with not too bad of a loss relatively speaking.

Things have been very different in 2023 so far and – although I had an entire year of downs and ups and downs throughout 2022 – I have gained 36% this year in just a little over 4 weeks! That’s about a 5-year gain in just over 4 weeks time! So, I’ve recovered all of my losses from last year (and then some). I always tell people that it makes sense to stay invested and to continue buying into downturns – even when things go badly – because when it turns… it turns. And you want to be fully invested to the extent possible when that happens.

I’ve done so well this year that I am now in the mode of “selling every gain.” So, every time my overall portfolio experiences additional gains, I actively look for more stocks to sell. I’m about 50% invested right now so I am finally becoming more of a lower risk investor much to my relief.

I was a high risk investor throughout 2022 (much to my dismay). I moved from being a low risk investor (back in 2021 – which is the level of risk I am supposed to be at given my financial circumstances) to a high risk investor throughout 2022. That was never supposed to happen. However, I am very much relieved that I still have the ability to “fight it out” and survive as a high risk investor. Needless to say, I will be making additional changes to tighten my techniques so that I don’t become as much of a high risk investor in the future.

I’m happy that I had the foresight to continue modifying my investment strategies. It really has paid off. This is something you always want to get into the practice of doing. Observe what happens and make adjustments to your investment strategies so that you can work towards improving your investment performance over time in accordance with your risk profile. I happen to presently be a low risk investor (although throughout 2022 I was temporarily high risk) but many of you will probably be higher risk investors. So, your investment strategies will probably need to be a bit more aggressive than mine.

You can be a very successful investor if you effectively use all of the tools and techniques available to maximize your investment returns. It’s been an interesting investing experiment I’ve been running so far for 2022-2023. We’ll see how things go in the future.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/)

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow.

Happy investing everyone!

#finance #stocks #investing #stockmarket #success

HAPPINESS/SUCCESS TIP: EMBRACE THE JOURNEY

Posted on by Joseph M. Brennan Jr.

Whenever I come across common expressions in life, I like to try to mindfully stop, reflect, and take a deeper, closer look. Because people frequently become numb to such expressions and these don’t have the influence and impact that they otherwise might. One such common expression is “enjoy the journey.” And, while I am very supportive of this idea, the truth of the matter is that not everything in life is enjoyable. However, that does not make them less valuable. So, a more encompassing expression might be “embrace the journey.”

Sure, for the subset of activities applicable (and to the extent possible), you will want to take steps to better “enjoy the journey.” But for everything else, you will simply want to “embrace the journey” by getting started, putting in the work, addressing or dealing with challenges, learning the lessons, doing some exploring, taking steps to engage in the life experiences you truly desire, and making any sacrifices needed to create a better and brighter future. So, there is much more to life than simply “enjoying the journey.” As such, make it a point to “embrace the journey” and by all means avoiding tendencies to resist the journey. Because resisting the journey will create a lot of unnecessary stress and negativity, delay the learning of key lessons in life, and limit you and hinder progress.

Prior to beginning any journey, it’s a good idea to take some time and put in the effort to figure out what specific pursuits you truly want to work towards or engage in (whether associated with goals, activities, people, purchases, work, addressing or dealing with challenges, and such) – especially those which require a substantial amount of money, time, effort, or energy. And here’s something you can do to help figure that out. And here’s something else which can be helpful along these lines as well as this and this. And for those bigger pursuits, try to find ways to test drive or simulate those experiences first to make sure they are what you truly want before putting in the money, time, effort, and energy. You can read about how to do that here. It’s also a good investment of time and effort to come up with plans for execution – even if they are initially only preliminary plans. You can always make refinements along the way.


The journey you start out on, at any given time, doesn’t have to be perfect because you can (and should) make adjustments as you go. And even if the path you are presently pursuing is not the exact right path for you right now, simply embrace the journey anyway and make any desired adjustments along the way. You will still gain valuable experiences, skills, insights, and knowledge, and you will learn valuable lessons. And learning what doesn’t work for you is also a valuable lesson to learn which can benefit you over your entire life journey. So, do some mindful planning, set out on your path, and embrace the journey all along the way.

Now, the above being said, there are also things you can do to better “enjoy the journey” for those specific activities which apply. One thing I like to do along these lines is mindfully incorporate “enjoying the journey” into what I do on a day-to-day basis. So, I make it a point to remind myself that my focus is happiness, peace, and enjoyment for whatever I am engaged in at the time (where applicable).

For example, if I need to drive or walk somewhere, I make it a point to leave early so that I can take a nice, relaxing, leisurely drive or walk, taking in the scenery (and perhaps even taking a different path to getting there), and reflecting or perhaps even smiling and daydreaming a bit when stopped in traffic or waiting at a stoplight or intersection. Because, anytime you are in a hurry or running late the opposite happens. You become so focused on getting there that you miss out on opportunities for happiness, peace, and enjoyment along the way – creating a lot of unnecessary stress and negativity in the process. Don’t do this to yourself.

As a another example, if I am engaged in reading or viewing something, I try to mindfully slow down and enjoy what I’m reading/viewing and take a more leisurely, thoughtful pace – reflecting on what I’m reading/viewing and how I might apply it – and taking mini-breaks to relax and take in the sunshine and sip a soothing, warm beverage before continuing on with my reading/viewing.

And, as a third example, if I am working out, I try to mindfully focus on the body part I am working on (or stretching) or the specific pose I’m presently doing when doing yoga. My workouts would not be nearly as enjoyable if I focused instead on rushing things and just getting it done so that I could get on with other things.

So, the point is to always “embrace the journey” to get the most out of life, make progress, and create a better and brighter future. And for the subset of activities where “enjoying the journey” applies, slow down a bit and make enjoyment a part of your regular, daily practice. Because once you start mindfully doing this on a day-to-day basis, it will grow from there from week-to-week, month-to-month, and year-to-year, and you will find yourself making happiness, peace, enjoyment, and progress a priority and a regular practice in your life. And that will feel wonderful. So, do this for yourself if you can.

This and other happiness and self-improvement related tips are provided throughout my self-help oriented books: https://brighterdayslifecoaching.com/published-books…/

#selfimprovement #selfhelp #selfdevelopment #intention #fulfillment #success #inspiration #happiness #mindfulness #peace

IT’S A GOOD TIME TO BUY FOR LONGER TERM INVESTORS

Posted on by Joseph M. Brennan Jr.

The IWM ETF (which tracks the Russell 2000 index) has dropped about 40% from its previous high. So, it looks like a pretty good time to buy for longer term investors. The IWM (and the Russell 2000 for that matter) might drop even more if we actually experience a recession (this index usually falls first and the hardest during recessions but is generally the first and the fastest to recover).

Regardless of whether we experience a recession or not, the IWM (and Russell 2000) is likely to recover its previous high within 3 years or so. If you’re thinking a 40% gain in 3 years sounds pretty good, then do your math again. Because it would be more like a 67% gain which is very substantial. Even if the IWM took 10 years to get back to even (which would be a very rare occurrence), that would be a 6.7% gain every year which is a pretty decent gain.

If you like technology stocks then the QQQ, which tracks the Nasdaq, has also dropped about 40% from its previous high which means it will also experience about a 67% gain once it gets back to its previous high.

Another thing you can do is split money between IWM and QQQ if that is your preference or buy over several days, weeks, or months. The only problem with that might be when they recover they generally rise sharply so you might miss out on some of the early gains if that happens.

You’re Welcome.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/)

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow.

Happy investing everyone!

#finance #stocks #investing #stockmarket #success

HOW TO LOSE YOUR SHIRT IN THE STOCK MARKET WITHOUT LOSING YOUR SHORTS TOO (PART THREE)!

Posted on by Joseph M. Brennan Jr.

It’s always a good idea to adjust your investment strategies over time. Those of you who have been following me closely know that I’ve had a real “knack” over the past 9 months or so for picking losing stocks. However, I have generally refused to let them go and have continued buying into them as the buy signals get stronger with every drop, and they became more and more attractive, with respect to all of the indicators I use to make investment decisions. And, as usual, I generally refuse to sell on “buy” signals and frequently do the opposite. I wrote about this back in March and April and didn’t realize at the time that this would become a multi-part series but I suppose that is how things are playing out for this year. Because, here it is months later and I am still fighting the downs and ups and downs of what has been a highly volatile stock market this year (most of which have been downs).

The fight continues but it appears some of the strategies I’m using are actually helping. The new strategy I am employing involves rotating out of the stocks which appear to be less favorable in nature and buying into new stocks which appear to be highly favorable in nature – even when the stocks I’m selling are carrying heavy losses. Now, many people might question such a move and be inclined to just hold the stocks long enough for a gain to be realized. However, the tax loss harvesting strategy I wrote about previously and the fact that I would stand to have an effective “gain” of about 24% based on my current tax bracket by selling these more unfavorable stocks (even if no further gains were realized in my portfolio) combined with the potential for much stronger gains by switching to much more favorable stocks, then the potential gains from here might be pretty substantial.

Is there any guarantee that the above strategy will work? Of course not. Investing is primarily about making decisions based on various indicators, the associated likelihoods, and employing effective strategies accordingly. So, at best you can position yourself for a potential favorable return, but there is never a guarantee.

I’m presently still a high risk investor (much to my dismay), but not nearly as extreme as I was back in March and April. As a result of all the buying I have done, I have moved from being a low risk investor (back in 2021) to a high risk investor. The low point for me so far this year was when I was 142% invested (yes – I was using margin) and down 41.19% for 2022 (and down 44% since September/October 2021). Presently, I am 97% invested and down 30.62% for 2022 (and down 33% since September/October 2021).

I haven’t been overly concerned with having a negative return for 2022 because all of the major stock market indexes are getting hammered this year so far (the recent lows being a 24% loss for the S&P 500 Index, a 34% loss for the NASDAQ, and a 28% loss for the Russell 2000) and even the ultimate, safe haven, low risk investment (the bond market) has gotten hammered with a highly unusual 11% loss. Eventually, the market indexes will recover and so will most of the stocks I’m holding. I would be more concerned if I was experiencing substantial losses while the major market indexes were showing significant gains.

You can read about the buy and sell strategies I’ve been using in Part One and Part Two of this series. I am mostly using the same strategies throughout the rises and falls in stock prices no matter what the cycles might turn out to be. If the stocks are dropping, I’m tending to buy more. And if they are rising, I’m tending to sell more. The only exception is the new strategy I’m currently employing where I am taking realized losses and rotating out of less favorable stocks and buying into more favorable ones.

I’m happy I’ve been modifying my investment strategies. It seems to be paying off. This is something you always want to get into the practice of doing. Observe what happens and make adjustments to your investment strategies so that you can work towards improving your investment performance over time in accordance with your risk profile. I happen to presently be a low risk investor (although right now I am temporarily high risk) but many of you will probably be higher risk investors. So, your investment strategies will probably be a bit more aggressive than mine.

You can be a very successful investor if you effectively use all of the tools and techniques available to maximize your investment returns. It’s been an interesting investing experiment I’ve been running so far for 2022. We’ll see how things go.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/)

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow.

Happy investing everyone!

#finance #stocks #investing #stockmarket #success

HOW TO LOSE YOUR SHIRT IN THE STOCK MARKET WITHOUT LOSING YOUR SHORTS TOO (PART TWO)!

Posted on by Joseph M. Brennan Jr.

It’s always a good idea to adjust your investment strategies over time. Those of you who have been following me closely know that I’ve had a real “knack” over the past 7 months or so for picking losing stocks. However, I refuse to let them go. And I continue buying into them because the buy signals keep getting stronger and stronger with every drop, and they became more and more attractive, with respect to all of the indicators I use to make investment decisions. And, as usual, I refuse to sell on “buy” signals and frequently do the opposite. I wrote about this back in March and didn’t realize at the time that this would become a multi-part series but I suppose that is how things are playing out. Because, here it is a month and a half later and I am still fighting the downs and ups and downs of what has been a highly volatile stock market this year (most of which have been downs).

The fight continues but it appears some of the strategies I’m using are actually helping. I’m still presently a high risk investor (much to my dismay), but not nearly as extreme as I was back in March. As a result of all the buying I have done, I moved from being a low risk investor to a high risk investor. The low point for me so far this year was 14 March when I was 140% invested (yes – I was using margin) and down 30.34% for 2022 (and down 34% since September/October 2021). Presently, I am 92% invested and down 20.65% for 2022 (and down 24% since September/October 2021). Although, the present 21% loss I am experiencing is substantial, it comes as each of the major indexes have either retested (in the case of the S&P 500 and the NASDAQ) or closed below their March lows (in the case of the Russell 2000 index). The last time the major indexes experienced these lows (back in March) my losses were far greater than they are right now. So, things are improving and moving in a positive direction.

I haven’t been overly concerned with having a negative return for 2022 because all of the major stock market indexes are getting hammered this year so far (the recent lows being a 13% loss for the S&P 500 Index, a 20% loss for the NASDAQ, and a 16% loss for the Russell 2000) and even the ultimate, safe haven, low risk investment (the bond market) has gotten hammered with a highly unusual 8% loss. Eventually, the market indexes will recover and so will most of the stocks I’m holding. I would be more concerned if I was experiencing substantial losses while the major market indexes were showing significant gains.

You can read about the buy and sell strategies I’ve been using in Part One of this series. I am using the same strategies throughout the rises and falls in stock prices no matter what the cycles might turn out to be. If the stocks are dropping, I’m buying more. And if they are rising, I’m selling more. I continue the process until I get to the point where I am either “all in” (including margin – at least for now) or exit the positions completely.

I’m happy I’ve been modifying my investment strategies. It really seems to be paying off. This is something you always want to get into the practice of doing. Observe what happens and make adjustments to your investment strategies so that you can work towards improving your investment performance over time in accordance with your risk profile. I happen to presently be a low risk investor (although right now I am temporarily high risk) but many of you will probably be higher risk investors. So, your investment strategies will probably be a bit more aggressive than mine.

You can be a very successful investor if you effectively use all of the tools and techniques available to maximize your investment returns. It’s been an interesting investing experiment I’ve been running so far for 2022. We’ll see how things go.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/)

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow.

Happy investing everyone!

#finance #stocks #investing #stockmarket #success

HOW TO LOSE YOUR SHIRT IN THE STOCK MARKET WITHOUT LOSING YOUR SHORTS TOO (PART ONE)!

Posted on by Joseph M. Brennan Jr.

It’s always a good idea to adjust your investment strategies over time. Those of you who have been following me closely know that I’ve had a real “knack” over the past 6 months for picking losing stocks. However, I refuse to let them go. And I continue buying into them because the buy signals keep getting stronger and stronger with every drop, and they became more and more attractive, with respect to all of the indicators I use to make investment decisions. And, as is usual, I refuse to sell on “buy” signals and frequently do the opposite.

As a result of all the buying I have done, I moved from being a low risk investor to an extremely high risk investor. This can happen from time-to-time and as long as I don’t remain a high risk investor for a long period of time, then that’s probably okay. I haven’t been too concerned because I’ve liked the patient approach I’d been using. And, frequently, losing stocks become leading stocks over time and stocks that continually get clobbered usually experience very strong reversals. So, I keep buying into them.

The low point for me so far this year was Monday (4 days ago – 14 March). I was 140% invested (yes – I was using margin) and down 30.34% for 2022 (and down 34% since September/October 2021). Ordinarily, as a low-risk investor I would rarely be anywhere close to 100% invested in the stock market (much less over-invested). But I was not willing to go down without a fight. And so far it has paid off handsomely. As of today, I am down 9.31% for the year and am 106% invested. So, that’s a huge, 21 percentage point gain in only 4 days. So, I’m very happy about this relatively speaking. It feels like victory even if it’s truly not in terms of me not earning any positive returns so far in 2022.

I haven’t been overly concerned with having a negative return for 2022 because all of the major stock market indexes are getting hammered this year so far (the recent lows being a 13% loss for the S&P 500 Index, a 20% loss for the NASDAQ, and a 14% loss for the Russell 2000). And eventually the market indexes will recover and so will most of the stocks I’m holding. I would be more concerned if I was experiencing substantial losses while the major market indexes were showing significant gains.

Now, a couple of years ago, I would have been “all in” several months ago and have been two or three times more negative using the strategies I had detailed in my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books (https://brighterdayslifecoaching.com/published-books…/). And these might still be very good strategies to use for higher risk investors. But for low risk investors, they may not be. So, I’m very thankful that I modified my approaches quite a bit since then so that I have a chance to experience shallower losses (relatively speaking) and recover from these.

The approach I’m presently using to buy into falling stocks is the following:

  1. If the initial position of a stock I bought drops 10%, and the stock still looks attractive based on the indicators I use to make investment decisions, then I buy 10% more shares than I did the first time (e.g., if I bought 100 shares the first time, then the second time I buy 110 shares: 1.10 x 100 = 110).
  2. If the stock drops another 10%, and the stock still looks attractive based on the indicators I use to make investment decisions, then I buy 10% more shares than I did the second time (e.g., 121 shares: 1.10 x 110 = 121).
  3. I continue this process with every drop.

The approach I am presently using to sell the gains is the following:

  1. I determine what a reasonable gain might be for the stock from the current depressed levels it is trading at (20%? 25%?). If the stock gains that amount from the lowest price I paid, then I sell that set of shares (e.g., if the stock rebounds strongly after the second buy of 121 shares in the above example, then I will go ahead and sell the 121 shares if the gain is substantial enough).
  2. I determine what a reasonable gain might be for the stock from the current level it is trading at after selling the first lot of shares (10%? 15%?). If the stock gains that amount from the most recent sell price, then I sell that next set of shares (e.g., if the stock gains the amount I’m targeting beyond the price I sold the 121 shares for in the above example, then I will go ahead and sell the 100 shares I bought the first time).

So, I am currently using the above process throughout the rises and falls in the stock price no matter what the cycles might turn out to be. If the stock is dropping, I’m buying more. And if it is rising, I’m selling more. I continue the process until I get to the point where I am either “all in” (including margin – at least for now) or exit the position completely.

The above strategy has really worked out well so far. Using my previous strategy, I would have been a much more aggressive buyer on the drops which would have led to much deeper losses and a much longer recovery time.

I’m happy that I modified my investment strategy back in September/October 2021. And this something you always want to get into the practice of doing. Observe what happens and make adjustments to your investment strategies so that you can work towards improving your investment performance over time in accordance with your risk profile. I happen to presently be a low risk investor (although right now I am temporarily high risk) but many of you will probably be higher risk investors. So, your investment strategies will probably be a bit more aggressive than mine.

Another thing I am doing in 2022 to maximize my investment returns is performing tax loss harvesting strategies to offset my realized gains and minimize my tax burden. This essentially, involves selling some of your losses to offset your gains. You can read all about my tax loss harvesting strategies here: https://brighterdayslifecoaching.com/maximize-stock-market-returns-by-performing-tax-loss-harvesting-to-minimize-tax-burden/

To the extent possible, what I plan to do in 2022 to maximize my investment returns will be to hold off on selling until the individual lots of the stocks I purchased passes the one year mark. I rarely do this because I tend to take substantial gains as they happen (and I might continue this practice if the gains are compelling enough). However, if I am successful in waiting a year before selling gains, then I’ll only have to pay 15% taxes on those gains instead of my typical 24% tax bracket. So, the tax incentive is huge for waiting on selling your gains if you have that kind of patience. Often, I don’t. But we’ll see what happens. I know I’ll have to do some additional selling soon since I’m presently 106% invested which is much too high for a low risk investor. But I’ll probably get there eventually.

You can be a very successful investor if you effectively use all of the tools and techniques available to maximize your investment returns. It’s been an interesting investing experiment I’ve been running so far for 2022. We’ll see how things go.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/)

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow.

Happy investing everyone!

#finance #stocks #investing #stockmarket #success #taxes

HOW TO MAXIMIZE INVESTMENT RETURNS EVEN WHEN EXPERIENCING SEVERE LOSSES

Posted on by Joseph M. Brennan Jr.

It’s always a good idea to adjust your investment strategies over time. Those of you who have been following me closely know that I’ve had a real “knack” over the past couple of months for picking losing stocks. However, I refused to let them go. And I continued buying into them because the buy signals kept getting stronger and stronger with every drop, and they became more and more attractive, with respect to all of the indicators I use to make investment decisions. And, as is usual, I refuse to sell on “buy” signals and frequently do the opposite.

As a result of all the buying I did, I moved from being a low risk investor to a higher risk investor. That can happen from time-to-time and as long as I don’t remain a higher risk investor for a lengthy period of time, then that’s probably okay. I haven’t been too concerned because I’ve liked the patient approach I’d been using. And, frequently, losing stocks become leading stocks over time and stocks that continually get clobbered usually experience a very strong reversal. So, I kept buying into them.

A couple of years ago, I would have been “all in” several weeks ago and have been deeply negative for the year using the strategies I had detailed in my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books (https://brighterdayslifecoaching.com/published-books…/). And these might still be very good strategies to use for higher risk investors. But for low risk investors, they may not be. So, I’m very thankful that I modified my approaches quite a bit since then and ended the year strongly positive.

The approach I’m presently using to buy into falling stocks is the following:

  1. If the initial position of a stock I bought drops 10%, and the stock still looks attractive based on the indicators I use to make investment decisions, then I buy 10% more shares than I did the first time (e.g., if I bought 100 shares the first time, then the second time I buy 110 shares: 1.10 x 100 = 110).
  2. If the stock drops another 10%, and the stock still looks attractive based on the indicators I use to make investment decisions, then I buy 10% more shares than I did the second time (e.g., 121 shares: 1.10 x 110 = 121).
  3. I continue this process with every drop.

The approach I am presently using to sell the gains is the following:

  1. I determine what a reasonable gain might be for the stock from the current depressed levels it is trading at (20%? 25%?). If the stock gains that amount from the lowest price I paid, then I sell that set of shares (e.g., if the stock rebounds strongly after the second buy of 121 shares in the above example, then I will go ahead and sell the 121 shares if the gain is substantial enough).
  2. I determine what a reasonable gain might be for the stock from the current level it is trading at after selling the first lot of shares (10%? 15%?). If the stock gains that amount from the most recent sell price, then I sell that next set of shares (e.g., if the stock gains the amount I’m targeting beyond the price I sold the 121 shares for in the above example, then I will go ahead and sell the 100 shares I bought the first time).

So, I am currently using the above process throughout the rises and falls in the stock price no matter what the cycles might turn out to be. If the stock is dropping, I’m buying more. And if it is rising, I’m selling more. I continue the process until I get to the point where I am either “all in” or exit the position completely.

The above strategy really worked out well during the slump I experienced towards the end of 2021. Using my previous strategy, I would have been a much more aggressive buyer on the drops which would have led to deep losses and a much longer recovery time. Back in early October, I had a 13% gain in the stock market which is an excellent gain for a low risk investor seeking to beat inflation (inflation was about 5% at that point in time). By early-to-mid December my gains had dropped to 1.5% for the year which was a pretty substantial drop – especially since it was only over a period of a few weeks. Fortunately, I was able to recover much of these losses by the end of the year with an 8.7% gain which still substantially beat inflation (inflation was 6.8% for the year). Much of the losses were probably due to investors selling losing stocks for tax loss harvesting purposes. As such, many of the stocks I’m presently holding are likely to start rising again in the new year. So, I should be positioned pretty well for at least the early weeks or months of 2022. You can read more about the above and all of my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I’m happy that I modified my investment strategy back in September/October. And this something you always want to get into the practice of doing. Observe what happens and make adjustments to your investment strategies so that you can work towards improving your investment performance over time in accordance with your risk profile. I happen to presently be a low risk investor but many of you will probably be higher risk investors. So, your investment strategies will probably be a bit more aggressive than mine.

Another thing I did in 2021 to maximize my investment returns was to perform tax loss harvesting strategies to minimize my tax burden. This essentially, involves selling some of your losses to offset your gains. This really helped me because about $7000 of my investment gains in 2021 put me into the 32% tax bracket. So, offsetting this effectively represented a 32% gain on those assets. You can read all about my tax loss harvesting strategies here: https://brighterdayslifecoaching.com/maximize-stock-market-returns-by-performing-tax-loss-harvesting-to-minimize-tax-burden/

The last thing I did in 2021 to maximize my investment returns was to avoid selling any additional gains once I came to the realization that I was in the 32% income tax bracket. So, I decided to delay any selling decisions on gains until 2022 so that I could avoid paying 32% taxes on these gains. It’s always a good idea to track all of your income and stock market gains for the year so that you’ll know whether you are entering a higher tax bracket than usual. Because, if you do, you might be able to make some adjustments prior to the end of the year to minimize your tax burden and maximize your investment returns.

What I plan to do in 2022 to maximize my investment returns will be to hold off on selling until the individual lots of the stocks I purchased passes the one year mark. I rarely do this because I tend to take substantial gains as they happen (and I might continue this practice if the gains are compelling enough). However, if I am successful in waiting a year before selling gains, then I’ll only have to pay 15% taxes on those gains instead of my typical 24% (or in the case of 2021 32%). So, the tax incentive is huge for waiting on selling your gains if you have that kind of patience. Often, I don’t. But we’ll see what happens. I know I’ll have to do some selling towards the beginning of the year since I’m presently 85% invested which is a bit too high for a low risk investor.

AN INTERESTING TWIST ON EXECUTION:

I wrote the above post over the past week and decided to leave it as such since it potentially offered an educational benefit to my readers. In actuality, however, things did not happen as expected so I am going to write about that now to provide additional educational benefit to my readers.

I had planned to execute as stated above, but always make a point to check my math prior to executing. And just as I was about to sell some of my losses, I realized that I had forgotten to subtract my standard deduction of $12,550. Once I factored that in I realized I was actually several thousand dollars below the 32% income tax bracket threshold. So, to take advantage of that new realization, instead of selling some of my losses, I elected to sell more of my gains.

I can’t tell you how many times I have executed plans by mistake due to calculation errors, faulty data, and misinformation. So, always get into the practice of checking your math, confirming your data, and checking your facts before executing your plans. Otherwise, you may not realize the benefits you are anticipating and, in fact, might make things worse.

You can be a very successful investor if you effectively use all of the tools and techniques available to maximize your investment returns. And tax loss harvesting can be an effective strategy to use.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/)

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow.

Happy investing everyone!

#finance #stocks #investing #stockmarket #success#taxes

MAXIMIZE STOCK MARKET RETURNS BY PERFORMING TAX LOSS HARVESTING TO MINIMIZE TAX BURDEN

Posted on by Joseph M. Brennan Jr.

One way to maximize your returns in the stock market is to perform tax loss harvesting strategies to minimize your tax burden. Essentially, this involves selling some of your losses to offset your gains.

Typically, I fall into the 24% income tax rate category. However, due to my capital gains to date in 2021, about $6000 of my income would fall into the 32% income tax rate category. As such, it makes sense for me to look for stocks that I haven’t sold yet to see if there are any losses I can use to offset this. If I can successfully do this, then this would effectively represent a 32% gain on those assets which would be advantageous for me.

If you are the type of investor who, like me, typically adds to positions over time when they drop in price, then you will want to ensure your standard taxable investment accounts are set up to track your cost basis using “First In First Out” (this is usually the default setting). If you are more of a momentum type investor who typically adds to positions over time when they increase in price, then you will want to ensure your taxable investment accounts are set up to track your cost basis using “Last In First Out.” Note: The tax loss harvesting strategy does not apply to taxable accounts such as traditional IRAs, 401Ks, and such since they are always taxed based on your income bracket at the time any funds are withdrawn. So, this strategy can only be used for taxable investment accounts outside of traditional IRAs, 401Ks, etc.

To effectively use the tax loss harvesting strategy, you must be sure not to invoke the “wash sale” rule which occurs when a security is sold for a loss and, within 30 days before or after this sale, a “substantially identical” stock or security is bought. The reason you want to steer clear of this is because a “wash sale” will provide no tax benefit until after the point in which you exit your position entirely.

Many investment brokers track each of the lots you buy and sell for each of the stock positions you hold. This can be a very handy tool for considering which financial assets to sell to gain the benefits of tax loss harvesting. For example, Fidelity (which is the online broker I use) tracks each of the lots I buy and sell (see Figure 1 below for an example).

Figure 1: Stock Lots Bought and Sold

The first thing to check to ensure you don’t invoke the “wash sale” rule is the most recent date you purchased shares. As you can see in Figure 1, 11/22/2021 was the last time I purchased shares of stock XYZ (and if you have multiple accounts you need to check them all since the “wash sale” rule applies across investment accounts whether taxable accounts or not including Roth accounts). So, to ensure that I don’t invoke the “wash sale” rule I need to wait until 30 days have passed before selling the stock. So, to be safe, I will need to wait until 12/23/2021 before selling this stock.

Since I am trying to offset about $6000 of the gains I’ve had over the past year which would fall into the 32% income tax bracket, I would sell about 400 shares of stock XYZ if Figure 1 represents my losses at that time. Because, my taxable investment account is set up to track my cost basis using the default of “First In First Out” I would start from the bottom of Figure 1 and work my way up from there to reflect what losses I could use to offset my gains. So, starting from the bottom and going up if I sold 400 shares (160+140+100) at that time, then I would have $6092.45 ($5020.74+$625.21+$446.50) of capital losses I could use to offset my capital gains. And if I wanted to be much more precise about the $6000 figure, I could sell a couple of shares less. The other nice thing I can do with this strategy is wait to sell those lots in Figure 1 that I have gains on until after a year has passed. Because then instead of paying 24% tax on those gains, I’ll only have to pay 15%. So, this strategy can allow you to both earn a substantial “return” on your losses and and minimize the taxes on your actual gains.

Now, if you accidentally had your investment account set-up to track cost basis using “Last In First Out” then you would probably have to sell all of your shares to realize the tax benefit you’re seeking. However, the tax loss offset would be much less since you would first be selling all of the shares that had gains or were less negative in nature. So, it’s important to make sure you set up your taxable investment accounts to track cost basis using “First In First Out” unless you tend to be more of a momentum type investor.

For people who do tend to be momentum type investors who typically add to positions over time when they increase in price and have their taxable investment accounts set up to track cost basis using “Last In First Out,” then you would start from the top and move down since the newest shares would be sold first. And you would try to hold your gains until after a year has passed so that you’ll only have to pay long term capital gains taxes (typically 15% or 20% depending on your income tax bracket) instead of the short term capital gains taxes associated with your income tax bracket.

So, the above pretty much sums up how to maximize your investment returns by using tax loss harvesting strategies to minimize your tax burden. The last thing you will want to do, however, is to ensure the “wash sale” rule is not invoked going forward by refraining from buying the same stock(s) within 30 days after selling it for a loss. If you do, then the “wash sale” will be invoked again and you will have realized no tax benefit from selling your losses. So, always be mindful of this.

By using the above strategy, I will avoid having to pay about $1920 on my tax return for 2021 (0.32*$6000 =$1920). So, using this strategy can really help.

You can be a very successful investor if you effectively use all of the tools and techniques available to maximize your investment returns. And tax loss harvesting can be an effective strategy to use.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/)

Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/

I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow.

Happy investing everyone!

#finance #stocks #investing #stockmarket #success#taxes