Tax loss selling

[Charlie]

On 12/16/2024 at 3:15 PM, gfp said:

Looking at the S&P equal weight or S&P "Value" index, they are red every day for 10 days in a row or something like that while the S&P500 is generally flat.  Seems like tax loss selling has produced a predictable opportunity for some of these beach balls being held underwater to bounce upwards starting around now. 

 

Here is a thread for folks to list their current favorite opportunities that appear to be pushed lower by this dynamic.

 

JOE ?

TDW / VAL ?

OXY ?

 

I have some that are too small to list.

 

What have you all noticed?  List some names, the time for these types of trades is this week

 

edit - I should add that unprofitable short capitulations also count - TSLA would be an example I suppose

 

gfp, any numbers of long-term performance regarding outperformance of the "Tax loss selling" strategy?

The strategy sounds good, but the historical outperformance is important.

Edited 7 hours ago by Charlie

[Charlie]

https://investingnews.com/daily/resource-investing/mark-these-tax-loss-selling-dates-on-your-calendar/

 

This article explains tax loss selling a little bit.

 

...

The flip side of tax-loss selling

As tax-loss selling starts, opportunities can open up for those who have spent the year on the sidelines.

In her piece “How Bout Tax Loss Buying?,” Gwen Preston of Resource Maven explains that Canaccord Genuity (TSX:CF,OTC Pink:CCORF) has found that from mid-November to mid-December, S&P/TSX Composite Index(INDEXTSI:OSPTX) stocks that are down more than 15 percent year-to-date underperform the index by nearly 4 percent. However, from mid-December to mid-January, those same stocks outperform the index by 3.6 percent.

“That outperformance is on top of gains the TSX reliably generates over that time frame,” Preston explains. “So instead of only seeing tax-loss selling as a time to generate tax credits by dumping dogs, let’s look at the opportunity to profit.”

How can investors time tax-loss selling?

Regardless of whether you’re engaging in tax-loss selling or buying, Steve DiGregorio, portfolio manager at Canoe Financial, recommends acting swiftly and aggressively as “liquidity will dry up.” 

He sees the second and third week of December as the ideal window, which is well ahead of the “Santa Claus rally” — the period around the last week of December when stocks tend to rise ahead of a healthier market in January.

For now, the year isn’t over yet, so whether you’re tax-loss selling or buying, there’s still time to talk to your accountant or financial advisor to determine which approach is best for you.