How? There's a $3000 cap on THL against regular income and capital gains is only taxed at 15%. $1M in realized capital gains is a pretty extraordinary circumstance.
So if you have $50,000 in capital gains and $53,000 in capital losses, your gains are "free". And you can deduct the extra $3k from ordinary income.
You can also carry capital losses forward each year.
You still aren't getting around the fact that you made a crappy investment somewhere to generate that loss.
If you have a diversified portfolio that is all gains, I think you're probably not actually diversified.
Diversified, but generally speaking it gains every year.
And no. Your portfolio is not as diverse as the entire market. Period.
Anyway, we are talking past each other.