My situation is that I have large cap gains from selling AMD (cap gains alone of 450K+ in 2026) with a mix of long term and short term sales. I have sold a bit too much, because 1) I am moving to a higher tax state with much higher W2 income in the latter half of 2027, 2) I am hoping to buy a house within the next 2-3 years and 3) did feel that the market was running hot/euphoric.
I feel overwhelmed by the impending tax bill and was reading up on direct indexing offered by Fidelity or PGIM. This made me think about doing a DIY version by buying a wide range of indices and stocks in different sectors as well as materials, crypto etc. Every month, I would sell the losers and repurchase a similar ETF/stock, keeping the winners until long term when I would sell to fund my house purchase.
The goal is to cancel out short term gains as much as possible this year while diversifying to minimize my risk. I have another window in the first half of 2027 to realize my gains in a relatively low tax environment, so some tax deferment this year could be beneficial.
1.**Does this sound like a reasonable plan and theoretically beneficial for me in my situation?** When I run basic math, I see this strategy winning against putting all of my cash into treasuries/SGOV in choppy/neutral and bull markets. In a bear market, SGOV would win short-term but diversified TLH investing partially offsets losses through tax loss harvest while maintaining market participation with possible recovery in the future.
2. **If so, the big question is exactly what mix to buy?** A balance of ETFs in various sectors (semis, healthcare, finance, insurance, consumer defensive, communications, consumer cyclical, industrial, energy etc) would be important obviously. And I plan on throwing in a good number of representative stocks like WMT and Autozone which would be resilient in case of sector rotation or a bear market **(and in an attempt to create enough dispersion which is a potential pitfall for DIYing)**. Anything else I should consider like materials (e.g. gold, plat), foreign markets, storage REITs etc?
The proportions would be something that I would need to figure out too. For example, how much to put into something like SOXX where I already have good exposure with 25 percent of my portfolio remaining in AMD?
Someone even suggested setting aside some % for lottery ticket trades like short term OTM options. Not sure if I am willing to go that far...but it reflects my current position where I coudl be slightly more risk-taking at least until end of this year.
3) **How much of my cash (\~750k) should I keep in SGOV/cash?** Obviously, I should have enough to pay off my taxes (I am planning to utilize the safe harbor rule to avoid penalties) next year, in addition to holding some reserve for re-entry of AMD if it experiences a significant dip. So I am thinking around 250K.
Thank you!