Raising Cash

[sulaco]

My wife and I have put an offer in on a house and have about 50% of the downpayment available in savings accounts. The other 50% will have to come from selling investments. This will require about 30% of what's currently in our brokerage account.

Of the money I need to raise, only about 50% of that is in long positions - and not necessarily positions I want to wipe out at the moment. The majority of it will need to come from short positions.

What is the best way to raise money in this situation? Should I be taking a bit from many positions to keep my asset allocation? Should I be trying to optimize for taxes?

[George_PA]

When you say optimize for taxes to me this sounds like sell the losing investments (bonds) and keep the profitable ones (stocks).   

I would probably do the opposite.  Sell some of the profitable ones (i.e. stocks) to raise cash, there is nothing wrong with taking profits off the table.  Who knows, 6 months or a year from now, the market could go south and wipe out all those gains (better to give the government 25% of the profits then give 100% of the profits back to the market). 

By cashing them them out now, you are locking in your profits.  Just keep in mind to get enough cash out to pay the tax bill come Mar or April of next year.

[gooki]

Sell to optimise taxes and fees.

[aclarridge]

Should I be taking a bit from many positions to keep my asset allocation?

I'd do this. Your asset allocation was already designed to optimize for taxes, right? Don't change your long-term investment philosophy because of what the market is currently valuing your investments at. Have an eye toward optimizing fees of course (if the math tells you to sell $100 worth of a position, and it costs $10/trade, maybe skip that one heh).

It's a good time to re-evaluate your investment philosophy if you haven't in a while though, since you're going to be trading anyway.

A majority of short positions though - that is a bit odd. Is that a short-till-its-zero strategy, or are you trying to time something?

[tomsang]

Depending on transaction costs you can sell your loss investments and buy an equivalent investment resetting your investments. Rebalance your portfolio based on your asset allocation.

Or you could put the down payment on the Visa:).

[sulaco]

A majority of short positions though - that is a bit odd. Is that a short-till-its-zero strategy, or are you trying to time something?

Sorry, I meant short term, not that they were shorts.