Taxpayers may write off $3,000 a year in capital losses that exceed capital gains. This means that if you lose $30,000 in stocks, you have 10 years to write off that money from your taxable income in $3,000 chunks, assuming you never have another capital gain later to offset it.
The tech bust in 2001 hit a lot of people, including myself. When the bust was over, I was still left holding some stocks (I did get out of some with gains thanks to Mrs. Director). Instead of selling off these losers all at once and having a huge writedown that would have to be carried over each year, I decided to hold and sell off in $3,000-loss increments each year. The money from selling them all off wouldn't be big enough to reinvest into something else, and as I sell off these stocks year after year, there is always the possibility they may come back a little.
This is my fourth year of selling off losses. Today it was some PMCS. I wonder when I bought this? (Keep in mind that it's a log scale)
At any rate, I am happy to report that I now have less than a decade to go now in selling these losers off. I just hope I have some gains some time in the future to write this off faster.