Harvesting in a Bull Market: Finding Opportunities When Everything’s Up

Isabella
Jul 30
4 min read

Most investors think tax loss harvesting only works in down markets. After all, how can you harvest a loss when your portfolio is hitting all-time highs?

But here’s the truth: tax loss harvesting isn’t just for bear markets. In fact, some of the most overlooked opportunities for smart tax savings appear in bull markets — when you’re not looking for them.

And with AI-powered harvesting tools now accessible to everyday investors, it’s easier than ever to unlock those savings without second-guessing your timing or exposure.

Why Losses Still Exist in a Bull Market

Even in strong market conditions, not all stocks go up at the same time. Sector rotations, earnings disappointments, interest rate shocks, and regulatory issues can cause sharp short-term drops — even while the S&P 500 keeps climbing.

Example:In 2023, while the market surged on the back of big tech and AI momentum, companies in the utilities and consumer staples sectors lagged. Big names like Pfizer (PFE), Verizon (VZ), and 3M (MMM) all posted double-digit lossesduring a time when major indexes hit new highs.

These underperformers create isolated loss-harvesting opportunities — and if you act smartly, you can:

Lock in a capital loss
Maintain exposure to the sector
Improve your portfolio’s tax efficiency

The Compounding Power of Small Harvests

Let’s say you bought Pfizer at $45 in 2022, and by mid-2024 it’s trading around $28. That’s a $17 per share loss, even though the broader market is booming.

If you sell it to harvest the loss, and rotate into a similar healthcare ETF — say, XLV — you keep your exposure to the sector while capturing the tax benefit.

Here’s the math:

You realize a $10,000 capital loss
That offsets $10,000 in gains from a partial rebalance in Apple (AAPL) or Nvidia (NVDA)
At a 15% capital gains rate, that’s $1,500 saved in taxes

Now repeat this process multiple times a year, across sectors and positions, and you’re potentially saving thousands per year — all during a bull run.

Real-World Sector Divergences in Bull Markets

Bull markets aren't uniform. They create winners and laggards, which is where harvesting shines. In 2024:

Tech and communications (Nvidia, Meta, Alphabet) soared
Consumer staples and healthcare (Procter & Gamble, CVS, Pfizer) stumbled
Small-cap stocks lagged the S&P 500 by wide margins

Even if your overall portfolio is up, individual holdings may be down, and harvesting those selective losses can offset gains from the winners.

Without actively monitoring each position, it’s easy to miss these windows — and that’s where automation and AI come in.

How AI Finds Losses in Bull Markets

The challenge in bull markets is that the obvious harvesting opportunities are fewer and less frequent — but they still exist. You just need a system that can:

Track every tax lot — not just average cost
Identify small, short-term losses even inside a winning position
Act quickly to sell and rotate into correlated alternatives
Avoid wash sales when prices rebound

AI-powered harvesting tools are built to scan thousands of tax lots daily. So even if a stock like Tesla (TSLA) has gone up overall, the software might identify a recent purchase that dipped 8% and sell that specific lot for a strategic short-term loss.

This is almost impossible to do manually unless you track each trade and cost basis line-by-line.

Managing Gains While Still Harvesting

In a bull market, you might be realizing gains for other reasons:

Rebalancing a portfolio that has become too tech-heavy
Selling appreciated stock for a large purchase (home, tuition, etc.)
Trimming individual stock positions for risk management

Each of these scenarios triggers capital gains. Harvesting losses from underperformers like Verizon, Disney, or Intel, for example, can offset those gains directly.

And if your losses exceed your gains, you can carry the losses forward to future years — creating a tax buffer for downturns or large windfalls later.

An Example of Smart Bull Market Harvesting

In 2024, Sarah, a 38-year-old product manager, saw her portfolio surge thanks to big bets on tech ETFs like QQQ and VGT. But she also owned a few individual laggards:

3M (MMM): down 25%
PayPal (PYPL): down 15%
Pfizer (PFE): down 30%

Even though her portfolio was up 14% overall, she used an automated AI tool to harvest $8,500 in short- and long-term losses, which offset $9,000 in gains from trimming Nvidia.

Net tax savings:$1,350 at a 15% capital gains tax rate, plus $3,000 deducted against ordinary income (since she had more losses than gains).

That’s $1,800 saved in a year when everything "felt like it was going up."

Don’t Wait Until the Market Drops

Ironically, most investors only start thinking about tax loss harvesting during downturns — when emotions are high and risk appetite is low. But by then, everyone is selling, liquidity tightens, and you might be forced to realize losses at the wrong time.

Bull markets, on the other hand, give you the freedom to be strategic, calm, and proactive. You’re not harvesting out of panic — you’re harvesting out of precision.

And with AI tools doing the work behind the scenes, it no longer requires daily effort or year-end guesswork.

Key Tips for Bull Market Harvesting

Zoom in on the portfolio level.Even if your portfolio is up, individual holdings may be down.
Use ETF rotation.Sell a down ETF and swap into a similar one — like rotating from VTV to SCHV — to preserve exposure while realizing the loss.
Watch for short-term losses.Short-term losses offset short-term gains, which are taxed at higher rates. Don’t let those slip by.
Set it and forget it.Let the AI tool monitor, identify, and act for you — daily, not just in December.

Final Thoughts

Tax loss harvesting isn’t just a bear market trick. In fact, bull markets offer a quieter, more strategic opportunity to fine-tune your tax liability while staying fully invested.

With the help of AI-driven platforms, even bullish investors can harvest losses at the tax lot level, reinvest intelligently, and carry those benefits forward. Over time, those small gains compound — not just in portfolio value, but in reduced tax drag and higher after-tax returns.