Comment Re:Why Bubbles show up (Score 1) 56
This isn't a rich thing tho. It's actually more of a middle/upper-middle class thing.
It's called tax loss harvesting and is well known. You're definitely right about the lottery effect, but steady returns are (ignoring taxes) better because the jackpot might not happen, but in real life the highest returns ARE indeed lottery like (a very small # of companies account for most of and index's return).
The ultra wealth real advantage is they can borrow against their shares (which they sometimes are not allowed or practically able to sell), but that also increases risk for the borrower (tho some risk goes to the lender, along with return (interest)).
Mere mortals do have some advantages: you (and trusts) can buy $10k in ibonds per year (safer than TIPS because ibonds guarantee at least a 0% return, while TIPS can lose (if real rates rise and/or deflation happens). Also the US has progressive income tax brackets, often at the state level as well.