So I picked up some names that looked like they were getting beaten for tax selling last week.
which means that in an up market they were going the wrong day...
It's just a horror show waiting to happen to my portfolio.
Friday, January 2, 2009
Unsettled
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5 comments:
I guess i don't understand the tax selling thesis in this market.
I would think most people have taken enough losses throughout the year... heck the indices were down 40%!!!
In an up-year I fully understand the tax loss selling at year end, but intuitively it makes no sense this year.
This guy who has some of my wife's money asked if I needed him to take some (more) losses the last week of the year. I laughed. The portfolio he manages is down 45% and he has already taken 5 digits in losses this year.
If you havn't sold a thing, and you are a Doctor, or whatever you sell whatever you have the worst loser until you are in a lower tax bracket.
My brother... the dumb ass, I told him to get out 2006 july, that we were coming to the end. and he had been in all these retailers. he hasn't sold a thing.
he said "I am still up in some of them, and could take some gains."
I rolled my eyes I kid you not this was early nov.
Europe is up 2%... those markets are reacting more to seasonality, than to economic data.. seems like a good sign... "New year" buying in Europe...
That is all it's about, is that some poeple sell to get into a lower bracket.... and sell into the low volume of the end of the year, it tends to "Distort" prices, out of proper "supply demand" pricing, since the motive has to do with tax season, and not profits and losses. that is what that game is about.
I keep toying with asking Teresa about it.
When you say that there may be a difference between an up year and a down year...
Your not taxed until you take a win or a loss on your portfolio... so "Maybe" an up year and a down year, don't matter.
I'm always reminded that Most people are either Dart throwing, or are investing like a "pro" most of which can barely beat the SPX.
If you're making $150K in salary, you can only off-set $3K in salary per year in addition to offsetting any gains.
Let's say you miraculously took $5000 in gains before October, then you can offset those and take an additional $3K for a total of $8K in losses. Not much.
In years with big gains, then those gains will be offset at year end... but I just don't see that happening this year.
My only small dispute, is that "people don't take gains"
only thing they want to offset is their salary, say you make 500K.
Selling some stock losses can get you down quickly, then just reinvest that money on the first two trading sessions... Even back into the same stock.
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