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The government will not pay you back for your losses. If you file the long form, you can offset investment losses against investment gains.
If you don't have gains to offset against - you lose.
But if your house loses value that is just your loss.

Look, math is hard and a lot of people do not understand it.
I ran two simulations with 2 different stocks over the past 5 years. I calculated what your gain or loss would be per year and the annual taxes required.
I assumed a 15% tax bracket and that the stock would be sold to cover any taxes.

Case #1: BTI (A tobacco stock) If you bought 100 shares on Jan, 1 2017 you would have spent $5628. Under the socialist tax of paying taxes on the gain every year, you would have paid $355.67 in taxes over the past 4 years. (Assume 15% tax bracket). If you had sold shares of stock to cover the tax every year, you would now have 93.4 shares of BTI which was worth a total of $3569.04 on Jan first 2021.
Got that? You would have lost $2058.96 in the market and paid $355.67 in taxes on that loss. This is what happens when the market goes up and down.

Case # 2: Tesla. If you bought 100 shares on Jan, 1 2017 you would have spent $4580. Under the socialist tax of paying taxes on the gain every year, you would have paid $$11,382.48 in taxes over the past 4 years as the price ran up to $880.02 per share in January of 2021. (Assume 15% tax bracket).
If you had sold shares of stock to cover the tax every year, you would now have 79.16 shares of of Tesla which was worth a total of $69,660.80 on Jan first 2021. OK. So you are doing good. Right?
The problem is that Tesla is now worth $598.78. If you had waited to sell your stocks until now, you would have to sell a lot more shares.

So this plan comes down to "Heads the government wins, tails you lose."
Not to mention all of the additional accounting that you will be required to do to keep track of this.

I'll share the spreadsheet if people want. PM me for it.