There can be tax advantages and also tax disadvantages, depending upon your particular situation and what you expect of tax rates in the future. And that doesn't even touch the (timing) risk you are taking by going to cash for 30 days. Market could go up (it often does Dec/Jan), or it could go down while you're on the sidelines.
As to tax implications - it appears it would be a short term loss. (There is an obscure rule about fund shares held less than six months that can turn short term losses into long term losses; that doesn't apply here as you've held the shares more than six months, but under a year.)
The best situation would be if you had short term gains that this short term loss would offset. Short term gains are taxed as ordinary income, so offsetting them has the most value.
If you don't have short term gains to offset, then these losses could be used to offset long term gains. That's not as valuable, because long term gains are taxed at a much lower rate (15% or less). If you expect long term gain tax rates to go up (say, to 20%), and you'll be selling in a few years, it might make sense to retain the higher cost basis (by not selling), and take a smaller gain in the future (so you'd be saving yourself 20% in the future, vs. saving yourself 15% now). Depends on your crystal ball.
If you don't have any capital gains to offset (neither long nor short), then up to $3,000 of losses can be used to offset ordinary income. In this situation, short term loss is used toward that $3,000 max; if that's less than $3,000, long term losses are also used toward that $3,000 max. In this situation, you're not getting any special benefit from the losses being short term, because long term losses could just as easily be used to offset the $3K of ordinary income.
Here are a few quick examples:
Ordinary income: $80K
Short term losses: $5K
Long term gain: $7K
In this situation, the short term losses are applied to the long term gains, leaving you with a net $2K in long term gain, plus the full $80K in ordinary income to be taxed.
---
Ordinary income: $80K
Short term losses: $5K
Long term gain: $1K
In this situation, the first $1K of short term losses is applied against the long term gain (leaving you no net long term gain to be taxed); the next $3K of short term gain is used to offset the ordinary income (leaving you $77K of ordinary income to be taxed). The final $1K of short term losses is carried over to next year's tax return.
---
Ordinary income: $80K
Short term losses: $5K
Long term losses: $3K
In this situation, the first $3K of short term losses is used to offset the ordinary income (leaving you $77K of ordinary income to be taxed). The remaining $2K of short term losses are carried over to next year, as are the $3K in long term losses.
---
Ordinary income: $80K
Short term losses: $1K
Long term losses $6K
In this situation, first the short term losses are used to offset the ordinary income. Since that's under $3K of losses, you can use another $2K (for a total of $3K) from long term losses to offset the ordinary income. That leaves you with $77K of ordinary income, no short term losses, and $4K of long term losses carried over to next year's return.
---
Ordinary income: $80K
Short term losses: $1K
Long term losses: $1K
In this situation, all the losses combined are less than $3K, so they're all used to offset the ordinary income. That brings the ordinary income down to $78K, and there are no losses left for next year.

Rono, a question: I bought a couple of international funds in April of this year. Sextant international has a 11% loss and Matthew Growth and Income has a 17% loss. If I were to sell these funds now, would that be considered a short term capital loss, and if so would there be any tax advantage to selling these funds? I would buy them back after 30 days. Thanks.

http://online.wsj.com/article/SB10001424052970204791104577108470491087782.html
occidental tourists get another shot at matthew asia funds
http://www.investmentnews.com/article/20111220/FREE/111229987
Nicholas Fund Has Built Stakes In Fortinet, Aaron'
http://news.investors.com/Article/595226/201112191758/nicholas-fund-bought-fortinet-and-solarwinds.htm?src=3MC595226
most stock funds have posted losses
http://www.suntimes.com/business/9546622-420/most-stock-funds-have-posted-losses.html
alpha hunger bandon capital
http://allaboutalpha.com/blog/2011/12/19/alpha-hunter-bandon-capital-alpha-for-the-small-investor/
cheapest and most expensive etfs
http://etfdb.com/2011/the-top-10-cheapest-and-most-expensive-etfs/

http://www.sec.gov/Archives/edgar/data/826732/000119312511347036/d269846d497.htm
Calamos Growth and Income Fund and Calamos Global Growth and Income Fund
Effective on the close of business January 20, 2012 (the “Closing Date”), Calamos Growth and Income Fund and Calamos Global Growth and Income Fund (each a “Fund”) is closed to new investors. Current investors in each Fund as of the Closing Date may continue to invest in their respective Fund, as well as reinvest any dividends or capital gains distributions. However, once an account is closed, additional investments in a Fund will not be accepted.
Each Fund has limited sales of its shares because Calamos Advisors, the Fund’s adviser, believes continued sales, without restriction, may adversely affect the Fund’s ability to achieve its investment objective. Sales of Fund shares to new investors will generally be discontinued as of close of business on the Closing Date, and financial intermediaries may not open new accounts with each Fund or add new investors to existing omnibus accounts after that time. You may be required to demonstrate eligibility to purchase shares of a Fund before your investment is accepted. If you are a current Fund shareholder and close an existing Fund account, you will not be able to make subsequent investments in the Fund. Each Fund may resume unrestricted sales of its shares at some future date, but neither Fund presently has an intention to do so.
Additional purchases of shares of each Fund will be permitted in the following instances:
(i) Acceptance of reinvestment of dividends and capital gain distributions on Fund shares.
(ii) Existing shareholders that have a position in the Fund may continue to add additional shares to their existing accounts.
(iii) Existing shareholders that have a position in each Fund may exchange shares of other funds in the Calamos Family of Funds for shares of each Fund.
(iv) Discretionary investment advisers may continue to invest in each Fund through an existing account at a financial institution and/or intermediary on behalf of clients who are current Fund shareholders.
(v) With Fund approval, all or a portion of the shares held in a closed Fund account may be reallocated to a different form of ownership.
(vi) In the case of certain mergers or reorganizations, retirement plans may be able to add the closed Funds as an investment option and sponsors of certain wrap programs with existing accounts in a Fund would be able to continue to invest in the Fund on behalf of new customers.
(vii) New and additional investments made through platform-level asset allocation models within mutual fund wrap and fee-based programs.
(viii) Direct clients of Calamos Advisors, or any affiliate, may open new accounts in each Fund.
(ix) Existing and new participants in employer-sponsored retirement plans, including employees of Calamos Advisors LLC, each Fund’s investment adviser, and any of its affiliates, and qualified defined contribution retirement plans, such as a 401(k) plan, profit sharing plan, 403(b) plan or 457 plan, that offer the closed Funds as an investment option as of the Closing Date may direct contributions to the Fund through their plan, regardless of whether the participant invested in the Fund prior to its closing.
(x) Upon prior approval, employees of Calamos Advisors and its affiliates may open new accounts in the closed Funds; Trustees of the Calamos Funds and directors of Calamos Asset Management, Inc. may also open new accounts in the closed Funds.
MFSPT3 12/11
--------------------------------------------------------------------------------
Each Fund reserves the right to modify the extent to which sales of shares are limited and may, in its sole discretion, permit purchases of shares where, in the judgment of management, such purchases do not have a detrimental effect on the portfolio management of the Fund or its Shareholders. Notwithstanding the forgoing, each Fund continues to reserve the right to reject any order for the purchase of shares in whole or in part for any reason, and to suspend the sale of shares to the public in response to conditions in the securities markets or otherwise.
Please retain this supplement for future reference.
2

"Ah, the game is in play. EuroZone banks apparently have been notified to raise capital in order to increase their money reserves. But just what they are supposed to sell, and to whom; to raise reservses remains the question. "
Did you notice Gold and Silver has been rather volatile recently. I guess they are now selling their gold reserves to raise cash and when multiple big players start selling Gold gets hit.

Howdy,
Again, a thank you to all who post the links and also start and participate in the many fine commentaries woven into the message threads.
For those who don't know; I ramble away about this and that, at least once each week.
NOTE: For those who visit MFO, this portfolio is designed for retirement, capital preservation and to stay ahead of inflation creep; if and when it returns. This is not a buy and hold portfolio, and is subject to change on any given day; based upon perceptions of market directions. All assets in this portfolio are in tax-sheltered accounts; and any fund distributions are reinvested in the funds. Gains or losses are computed from actual account values.
While looking around.....Triple Dog Dare Ya ! Ah, the ultimate challenge words brought to life again with the movie, "Christmas Story". The phrase is one from my childhood period; as well as are many of the "stories" within the movie. One may suppose this phrase could also be a challenge statement that is self-directed towards one's investments, too.
This house is pretty much tired from the continued challenges for the past two years coming from the EuroZone. Our bond portfolio, overall; has offered support to positive returns for the past two years, as the equity and equity related HY bond sectors have been getting head slaps. The EU challenge will continue, as there remains legal structures in place which preclude a fix (temporary); as is available here in the U.S. The Euro Central Bank can not monetary support the numerous, independent country banks. Methods are being reviewed to become creative and use a "by-pass" to help resolve the situation; as with some Euro countries providing monies directly to the IMF, which in turn could loan the money back to other Euro countries that need the support. Ah, the game is in play. EuroZone banks apparently have been notified to raise capital in order to increase their money reserves. But just what they are supposed to sell, and to whom; to raise reservses remains the question. One may also suspect that lending/loans (revenus generation) would be only to the most highly qualified; which continues to spell the words, "tight money supply". The Basel III accord, which sets new standards for bank reserves will also come into play in 2013; if my recall is correct. Looks like a continued tough road ahead for Europe.
Between the EuroZone and a spellbound/get elected in 2012 for our country; I remain a bit skeptical as to where the economic growth will emerge in 2012; and continue to find strong headwinds for the old investment dollars.
I Triple Dog Dare You !
I have retained the following links for those who may choose to do their own holdings comparison against the fund types noted.
This 1st link to Bloomberg is for their list of balanced funds; although I don't always agree with the placement of fund styles in their categories.
http://www.bloomberg.com/apps/data?Sector=888&pid=invest_mutualfunds&ListBy=YTD&Term=1
These next two links are for conservative and moderate fund leaders YTD, per MSN.
http://moneycentral.msn.com/investor/partsub/funds/topfundresults.asp?Symbol=$HF&Category=CA
http://moneycentral.msn.com/investor/partsub/funds/topfundresults.asp?Category=MA&Type=&symbol=$HF
Such are the numerous battles with investments attempting to capture a decent return and minimize the risk.
We live and invest in interesting times, eh?
Hey, I probably forgot something; and hopefully the words make some sense.
Comments and questions always welcomed.
Good fortune to you, yours and the investments.
Take care,
Catch
SELLs/BUYs THIS PAST WEEK:
NONE
It appears, that without a most wonderful equity rally before year's end, that we won't obtain a full 5% return for the year. That may cover inflation and taxes going forward; but at the very least allows the magic of "compounding" going forward, versus working the catchup game from a negative position. As with others, this house finds many year end distributions among our fund holdings over the past two weeks. A reflection upon the links above; we attempt to establish a "benchmark" for our portfolio to help us "see" how our funds are performing. Aside from viewing many funds within the balanced/flexible funds rankings (the above links), a quick and dirty group of 3 funds we watch for benchmarking are the following:
***Note: these YTD's per M*
VWINX ....YTD = + 8%
PRPFX ....YTD = + 1.7%
SIRRX .....YTD = +2.4% (appears to be sitting upon cash)
None of these 3 are twins to our holdings, but we do watch these as a type of rough guage. Ironically, if we had 1/3 of our total portfolio in each of these funds, the average YTD would be similar to our current YTD. Perhaps we should do this very investment with these 3. A "set it and forget it" model. I have not pushed these 3 through the M* asset allocation, but plan to do this, as time allows; to find the end mix.
Portfolio Thoughts:
Our holdings had a -.17 % move this past week. And yes, we are satisfied with our risk adjusted returns YTD. If the portfolio can pull a +10 to 12% for the year; you will not hear any whining from this house. (This sentence was from an April write; and I/we suppose a +5% for the year may now look good, too !)
I expect some rough waters, changing winds and opposing currents; causing the most serious attention being given to a firm hand upon the rudder control. (April report text)
The immediate below % of holdings are only determined by a "fund" name, NO M* profile this week
CASH = 0%
Mixed bond funds = 91.9%
Equity funds = 8.1%
-Investment grade bond funds 26.8%
-Diversified bond funds 19.8%
-HY/HI bond funds 23.2%
-Total bond funds 17.8%
-Foreign EM/debt bond funds 4.3%
-U.S./Int'l equity/speciality funds 8.1%
This is our current list: (NOTE: I have added a speciality grouping below for a few of fund types)
---High Yield/High Income Bond funds
FAGIX Fid Capital & Income
SPHIX Fid High Income
FHIIX Fed High Income
DIHYX TransAmerica HY
---Total Bond funds
FTBFX Fid Total
PTTRX Pimco Total
---Investment Grade Bonds
APOIX Amer. Cent. TIPS Bond
DGCIX Delaware Corp. Bd
FBNDX Fid Invest Grade
FINPX Fidelity TIPS Bond
OPBYX Oppenheimer Core Bond
---Global/Diversified Bonds
FSICX Fid Strategic Income
FNMIX Fid New Markets
DPFFX Delaware Diversified
TEGBX Templeton Global (load waived)
LSBDX Loomis Sayles
---Speciality Funds (sectors or mixed allocation)
FCVSX Fidelity Convertible Securities (bond/equity mix)
FRIFX Fidelity Real Estate Income (bond/equity mix)
FFGCX Fidelity Global Commodity
FDLSX Fidelity Select Leisure
FSAGX Fidelity Select Precious Metals
RNCOX RiverNorth Core Opportunity (bond/equity)
---Equity-Domestic/Foreign
FDVLX Fidelity Value
FSLVX Fidelity Lg. Cap Value
FLPSX Fidelity Low Price Stock
MACSX Matthews Asia Growth-Income

IMHO, all sturm und drang signifying little. Your dividend fund pays you last as well - since you have to your own costs first (here, trading costs). You're only getting net.
And that's all this whole thread at M* is saying (aside from what a company's dividend represents) - that mutual funds have costs and you get net.
Funds garner cash - from dividends, from interest, from realized net capital gains. That cash, less the expenses incurred in acquiring said cash (such as trading commissions, office expenses, salaries, etc.) is distributed to shareholders. A primary difference between investment companies (mutual funds) and corporations with respect to dividends is that funds are required to distribute substantially all of their net profits; corporations typically retain some profits.
Mutual funds are a model of transparency regarding dividends in comparison with the underlying companies that can do almost anything they want, and bury data legally (see Enron). cf. Dodge v. Ford for the exception that proves the rule - that in exceptional circumstances, coroporations can be compelled to distribute dividends.

Total capital gains = long term gains + short term gains.
Note that short term capital gains in mutual funds are treated as (nonqualified) ordinary income.
On your 1099 all you'll see is long term gain distributions and income distributions (which include short term gains); the income distributions are broken down into qualified and nonqualified.
Unlike stocks, where you can balance short term gains against short term losses, with fund distributions, you never see the short term gains broken out. So you cannot balance them out against capital losses.

@msf: Well, I appreciated it - thanx!! Have a much better handle now on the workings.
But I look at some of the funds I have held forever, & some I haven't, & look at how wildly my income fluctuated over the past 8-9 years (remember that bullc**p about you will defer taxes on your IRA until after age 60 when your tax bracket will be lower -- haha -- only I had a better job & income AFTER I hit 60 -- and 70, plus not to even mention medicare surcharges kicking in just as I "retired" from the second job etc etc). The only conclusion I can reach is that trying to guess what your income & taxes will look like, and most of all, what the capital gains taxes may look like even a couple of years ahead is strictly a gambling game. I have a pile of these forms sitting on the table and maybe my election "could" make a difference in some cases, but I honestly just don't think it is worth a lot of effort to try to outguess the future. The only thing certain is that we will all be paying more taxes that we would have guessed 20 years ago. And the future will be different from what we think.....

Holy cow. THAT was thorough. Thank you! I get it. I cannot help but to think that the gummint ought to simplify all of this by making the equitable selection among all the various options and dictate that ALL of us will be paying taxes THIS way, not THAT way; or, permit my wonderful professional tax adviser to simply choose the option that best suits my circumstances. JEEZ.
Anyhow, I do believe that I'll be paying zero taxes on cap. gains going forward, given my bracket.

Depends.
For example, if you're liquidating a position, then all of the methods except average cost give the same result. That's because you're selling all shares, so it doesn't matter whether you say you're selling the highest cost ones first, or the oldest ones first, you're selling the same shares (i.e. all of them). And all methods except average cost use the actual cost of the shares sold.
In a rising market, the long term shares will have a lower cost than the short term shares (definition of rising market). So if you use actual cost, you'll have higher than average gains on the older (long term) shares, and smaller than average gains on the newer (short term) shares. That's good - short term gains are taxed at a higher rate. But if you were to use average cost, then all the shares, long term and short term, would show the same gain. So your short term shares would show more gain than if you'd used actual cost, and that's bad.
In a falling market, the opposite is true.
If you're not liquidating your position, then the distinction between FIFO and the other actual cost methods becomes significant. As before, if you're selling in a rising market, then you're selling off shares with the lowest cost, and thus realizing the highest gains, rather than deferring them. You might want to sell the long term shares with the highest (not lowest) cost. That way, you realize less gain now (at the expense of realizing more gains when you sell the remaining shares).
There are all sorts of options available now, depending upon your broker or fund company. Many are designed to optimize your tax situation.
But you can specify which shares you're selling at the time you sell the shares (unless you indicate or have defaulted to average cost, in which case the shares are sold oldest first, just like FIFO). And that gives you the most flexibility, because you're deciding at the latest possible time how to account for the shares sold
Some systems will help you select those shares at the point of sale to optimize taxes. For example, Fidelity's current system will let you pick long term shares first, or short term shares first. And if you do select one type (e.g. long term), upon request it will automatically identify the highest cost long term shares (if that's what you want), or the lowest cost long term shares (if you pick that option), or the set of long term shares whose cost comes closest to the redemption value (minimizing net gain/loss). Same as if you'd selected one of these as your default. (You selected FIFO as your default.) Or you can pick and choose each share to sell.
If I were relying upon the default, I'd probably either select average cost (if I tended not to liquidate my positions) or minimize gain (with selling long term first). But that's me, and it depends on what your particular tax situation is. If you're expecting capital gains tax to rise significantly (e.g. you're in a zero bracket this year for cap gains, but will be paying 15+% next year) then you might want to sell your lowest cost shares first (to realize the most gains now, when they're not taxed).

Five small fund recommendations from a Wall Street Journal story. One fund rec each from me (Pinnacle Value), Bob C (Artio US Smallcap), Johanna Turner (a friend of the Observer who offered Marathon Value), Russ Kinnel of Morningstar (Bogle Small Cap Growth) and Todd Rosenbluth of S&P Capital IQ (Government Street Equity). In all honesty, I've never heard of the latter but will go learn something.
http://online.wsj.com/article/SB10001424052970204224604577027840539523920.html
As ever,
David

I'm one of those "lucky" ones: 10% tax bracket, so cap gains are untaxed. What was Ted saying? Dividends and interest ARE taxed? I should already KNOW that, but I don't. And I have a professional do my taxes. I wouldn't dream of trying to go through all that crapola MYSELF. My Rollover IRA (PREMX: TRP) generates monthly income I've not yet decided to tap, so it gets reinvested. My Trad. IRA is in MAPIX and spins-off $$$ every quarter, likewise untapped and reinvested. Current employment income is non-taxable. Strange but true, yes. I'm not complaining.

Ted,
I think it is important to know when you are retired and in the 15% tax bracket, that either 85% of your Social security or less depending on the interest, dividends, including tax-free, and capital gains are included in taxable income. Lower than 85% is good if you can control the amount. Also, for 2011-2012 capital gains are taxed at 0% if in 15% tax a bracket.

From article: "Balance sheet solvency [the raw stuff of financial confidence] must be addressed in tandem with monetary policy in order to achieve financial and economic stability."
Some interesting comparisons of eurozone troubles with China's and Japan's.
Andrew Foster is former CIO of Matthews Asia funds.
http://news.morningstar.com/articlenet/SubmissionsArticle.aspx?submissionid=132436.xml&part=1

Hi Mike- maybe Catch22 can help a bit with this one. He and I were discussing this subject with respect to a number of American Century "Target Date" funds, and here is a partial section of his commentary:
As to the Am Cent Target date funds. These are Zero Coupon bond issues. Aside from the 2015 and 2020 years (when the fund will close), there is also a BTTRX; which is the 2025....this one will knock your socks off. More so the 2025 versus the other two is tied pretty much to the 30 yr Treasury bond yield; which has continued to drop since August.
Use your chart site again and place BTTRX, FLBIX, TIP, STPZ, LTPZ, VEDTX, TLT and ACITX. I have not run these on a chart and there will be some differences as they are all not twins; but you will see the effects of the Treasury bond areas and the continued drop in yields from folks wanting these during unsettled times and the resulting increase in value. When, at some point in the future that interest rates are allowed to; or forced to rise, these excellent numbers today, will head to the downside. My most watchful problem here in trying to find when the winds start to shift with rising interest rates !!!
Hope this helps some- OJ

It's unlikely a 26 year old has capital to fund an account with positions in all those assets. Just start with a broad index fund like SCHB, SCHD, SCHF. Others can be added as needed.

Sorry MJG, but small victories are so infrequent these days. My monitor was "on"... is "on"... will remain "on".
Lots of lipstick being applied to all sorts of PIIGS today.
My top three fund gains for the day:
CAMAX +8.04%
VGPMX +7.71%
HRVIX +6.78%
My least gainful funds for the day:
EDV -3.32%
USAIX -0.15%
USATX 0.00%

Reply to @MaxBialystock: I think my only concern is that when people get screwed, there's the risk of it going the other way. To use an example, if MF Global screws people in the manner they did (taking from customer accounts to prop up their own bad bets), people who got screwed are angry, but others who didn't get screwed go, hey - that could happen to me, too and you may get people who take some or all of their money out. If those behind the MF Global situation are not dealt with by the authorities (where's John Corzine, and has he even been questioned yet?), there aren't answers (people still don't even seem to know how much money is missing), etc etc - you may get further flight of capital when people feel like this could happen and those behind it aren't dealt with in a satisfactory manner or at all.
I think there's a point where, whether it's MF Global or some other organization or governments, where people don't tolerate it anymore. I think that level of toleration in other countries is varying degrees lower, but I think you're going to start to see it here more often if things continue in that manner. Additionally, non-policies and no oversight will likely lead to more MF Global-style situations, which will lead the retail investor (and to some degree larger investors; hedge funds have also seen significant outflows) to continue to leave the markets.

This is a fairly good article. It does though beat a dead horse to death. Items 1-5 can be boiled down to: multiplier compounds return for each reset period.
For example, with a 2x multiplier, a daily reset, and a return of r1, r2, etc. for the index over sequential days, the fund's return is (1+2r1)(1+2r2)(1+2r3) ....
So of course if the index goes up then down 10%, you have 120% * 80% = 96% (article item 5), and the greater the magnitude of the periodic returns r1, r2, ... (i.e. the greater the volatility) the greater this distortion effect (item 4). So "tracking error" increases (across multiple periods) as the multiplier compounds gains and losses (item 3). Saying that you don't get back to even when the index does (item 1) is just a special case of this tracking error.
SeekingAlpha has a better (and older) article that builds on that simple explanation. And it discusses the impact of leveraging costs more extensively, providing real world examples.
For a more complete discussion of why leveraging costs and multiplier effects can even completely wipe out higher multipliers, see Potomac (now Direxion) Fund's explanation of why they chose a modest 1.25 multiplier.
http://web.archive.org/web/20030522204204/http://www.potomacfunds.com/data/125approach.pdf
Those funds no longer exist, however. When the company could not compete against Rydex and ProFunds, it switched Direxion, and tried to out-multiply these families. When that didn't garner market share, it made another pass at offering the marketplace another differentiated product - monthly resets. Some of these ideas are good, but I have trouble with a company that doesn't have the courage of its convictions. The good news is that since these funds (even monthly resets) are pretty short term holdings, you don't have to worry too much about whether the funds will be around in 2013.