3547: Taking Advantage of Mr. Bear by JL Collins on Market Downturn Investing

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🗓️ 3 May 2026

⏱️ 9 minutes

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Summary

Discover all of the podcasts in our network, search for specific episodes, get the Optimal Living Daily workbook, and learn more at: OLDPodcast.com. Episode 3547: JL Collins shows how a market downturn can be used strategically to reduce or eliminate capital gains taxes while keeping an overall investment plan intact. By shifting assets between taxable and tax-advantaged accounts, he demonstrates a practical, disciplined approach to preserving wealth without trying to time the market. It’s a clear example of turning volatility into opportunity while staying grounded in long-term investing principles. Read along with the original article(s) here: https://jlcollinsnh.com/2020/03/09/taking-advantage-of-mr-bear/ Quotes to ponder: "You play the cards you are dealt not the ones you wish you had." "Money you intend to spend in the next five years or so is best held in cash, which is what a money market fund is, or bonds." "Act too soon and we miss out on extra wandering. Wait too long and I might not have the energy left to easily make the transition." Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	This is Optimal Finance Daily, taking advantage of Mr. Bear by J.L. Collins of J.L. Collins, N.H.com.
0:10.1	Today, March 9th, 2020, I decided it was time to cuddle up to Mr. Bear and let him help me avoid some capital gains taxes.
0:20.1	As regular readers here know, for the past few years, we have been homeless and nomadic.
0:25.8	It's a lifestyle that agrees with us and when we'd like to keep doing for some time.
0:30.4	However, at some point, age will force us to settle down.
0:34.5	The trick is deciding when exactly that is. Act too soon and we miss out on extra
0:39.9	wandering. Wait too long and I might not have the energy left to easily make the transition.
0:45.3	But sometime in the next five years, there's a better than even chance that we'll be buying a final
0:50.4	year's house. To that end, we've had money growing in a taxable account invested in,
0:56.1	of course, VTSAX. As I tracked this against the eventual sale to fund the house, I realized that
1:03.1	we'd be on the hook for a 20% capital gains tax, until at least this new market sell-off.
1:10.0	Suddenly, that capital gain was disappearing.
1:13.0	Indeed, with an 8% drop today, it would be completely gone.
1:17.1	So with the market down about 6.34%, figuring that we'd be close enough,
1:22.2	I put in the sell order and moved from VTSAX to our money market fund.
1:27.9	Conveniently, by the market's close, it was down 7.6%, almost exactly when I needed. Good luck
1:34.7	that. So with this sale, I now have the capital freely available and will owe little to no
1:40.4	capital gains tax. At the same time, I then sold an equivalent amount of VBTLX bonds
1:47.2	and bought VTSAX stocks in an IRA. Because this was done in an IRA, there's no tax consequence.
1:55.3	The net effect is that I have moved bonds from the IRA and stocks into it, again while freeing up money for the future
2:02.6	purchase with no capital gains tax to be paid. At the end of the day, our asset allocation
2:08.1	remains the same. This is not a bet that the market has bottomed. Q&A. Wouldn't you have been
	...

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