Matt Levine’s Money Stuff: Tax Alpha Needs Some Real Alpha

Pre-tax alpha

We talked last month about tax alpha. The basic idea is that it is hard to beat the market by buying the stocks that go up and avoiding the stocks that go down. It is, however, relatively easy to buy some stocks that go up and other stocks that go down. Owning stocks that go up is good (you have more money), and owning stocks that go down is also good: You sell them, realize a tax loss, and use that loss to offset other gains and reduce your taxes.

This is pretty straightforward; it is called ...