Generally, at the end of each year I look at what stocks I want out of my portfolio, I then try to sell a balance of winners and losers. Per IRS rules on capital gains and losses, “if your capital losses exceed your capital gains, the excess is subtracted from other income on your tax return, up to an annual limit of $3,000 ($1,500 if you are married filing separately)”. Hmmm let’s think about that, a $3000 write-off against ordinary income is available every year. But, if I’m a really good investor, you might be thinking, shouldn’t I have gains every year and never be able to take advantage of this. Well, actually if I’m a really conservative investor I may not be able to take advantage of it often. But, if I pick stocks at least aggressively enough so that I have some winners and some losers, I should make sure to sell off at least $3k of losses to take advantage of this free write-off. A wise investor should then have plenty of accruing capital gains in winners whose tax is essentially deferred indefinitely until needed. An investor who plays it really safe misses out on this write-off.