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[posting]32796109[/posting]Tax loss selling – Ahead of the Bell Posted: December 03, 2007, 8:00 AM by Jonathan Ratner Market Call, Ahead of the Bell Had a rough November in the equity markets? You are not alone, but take comfort in the fact that you can now do something about it: Sell some of your losers, claim the capital loss on your tax return in the New Year and get ready to buy back some of those losers in January. Of all the hare-brained schemes for getting ahead of market trends, this one actually has a pretty good track record for taking advantage of the ups and downs in the market -- and it works in many countries. "Our own research and academic research have shown that previously underperforming stocks tend to underperform even more so in December, before recovering in the following January," said Yin Luo, quantitative strategist at CIBC World Markets, in a research note. The idea here is that wily investors tend not to wait until the end of December to dump their underperforming stocks. Instead, they get a month-long headstart to give them enough time to buy back those under-performers in January, at fire sale prices in some cases. Some mutual fund managers sell in December to get the sad-luck names off their yearend reports. Either way, today is the beginning of the tax-loss selling season. If you ignore it, some of your downtrodden stock picks could be swept up in the selling frenzy over the next month, driving their prices down even further for no apparent fundamental reason. Of course, they could bounce back the following month when the so-called January effect kicks in and the buyers return. But by selling now and buying later, you stand a good chance of eking out a few extra bucks or at least protecting yourself from losses over the next four weeks. Mr. Luo crunched the numbers for about 400 stocks and 120 income trusts to get a look at this trend over the past 18 years. He found that tax-loss selling in December worked best with stocks, with the strategy working in 12 of the past 18 years and producing an average of 2% savings. However, the January rebound was far less reliable, working in only seven of the past 18 years. The strategy works best with smaller stocks, and some years work better than others. Last year was a decent year, when losing stocks fell another 4% in December and then rebounded about 2% in January, turning a lacklustre couple of months into reasonable gains. One of the best years was 2000, when losing stocks plummeted another 7% in December before rebounding about 14% in January, turning the whipsaw action into a potential 21% gain for nimble investors. The best part about Mr. Luo's research is that he has assembled a list of Canadian stocks that are candidates for tax-loss selling this month. These stocks have been hammered this year, with losses ranging between 54% in the case of March Networks Corp. and 87% in the case of Neurochem Inc. Many of the stocks are small-cap names. The bigger ones include: Angiotech Pharmaceuticals Inc., ATS Automation Tooling Systems Inc., Cott Corp. (BCB/TSX), First Calgary Petroleums Ltd., Gammon Gold Inc., GLV Inc. and Quebecor World Inc. If you own any of these stocks, consider selling them now. Chances are, they will be even cheaper in the New Year. David Berman |
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| aus der Diskussion: | CDC Corporation Informations Thread |
| Autor (Datum des Eintrages): | boerseaugsburg (17.12.07 21:25:06) |
| Beitrag: | 4,511 von 4,866 (ID:32796315) |
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