How to tax-loss harvest a short position using balance sheets

Mini-conference in 3 weeks in Seattle, WA. Full event: Basis Manhattan (Dec 3-4, 2026) is nearly sold old.

Heads up Seattle-area advisers!

Basis Points: Seattle is coming to Stoup Brewing (Capitol Hill) Weds Nov 18, 2026.

I'm pleased to announce partnerships with JP Morgan Asset Management and CFA Society Seattle.

When I was first learning how to short stocks, I got out a pen and paper and wrote every step, and totally screwed it up.

A few years after that, this Khan Academy video dropped (17 years ago!) and things finally clicked.

If you look closely at these late '00s renderings, you'll notice A|L for assets and liabilities, a familiar balance sheet!

For some reason, Sal could explain this better than any finance professor I ever had, using (what I'll call) "the balance sheet method," which cracked the concept of shorting wide open for me.

Let's take the same idea and extend it to tax-loss harvest a short position.