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Tags: Arends | year-end | tax | stocks

MarketWatch's Arends: Year-End Tax Sales of Stocks Create Buying Opportunities

By    |   Tuesday, 11 November 2014 11:56 AM EST

Many investors sell some of their losing stocks near year-end to book a tax loss, and that provides excellent buying opportunities for the rest of us, says MarketWatch columnist Brett Arends.

"It comes around every year, usually in late November," he writes. "Think of it as Black Friday for Wall Street's contrarians. The effect of this rushed selling is that it tends to drive down the prices of the stocks in question even further for a couple of weeks."

There should be plenty of candidates, Arends says. A whopping 139 of the companies in the S&P 500 have seen their stocks drop so far this year. That group includes minor declines, such as 0.4 percent for AT&T, and big moves, such as a 12.8 percent drop for IBM.

"The smart move is to use the fire sale to buy more cheaply things that you might buy at full price anyway. It's like shopping in any sale. Stay disciplined. Only buy things that you really want. Otherwise you're not saving money," Arends writes.

"Those who focus on buying good quality companies when they are cheap in relation to their fundamentals usually end up making good money."

Meanwhile, mixed views course through the market over short-term strategy, with major indexes hovering near record peaks.

"Of course you can't just jump into the market now," Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank, tells Bloomberg.

"Valuations are not too elevated, but the U.S. is definitely not cheap. [Still,] with indexes at new all-time highs, it's clear that investors are willing to pay for quality. S&P 500 companies have reported great figures for this earnings season, and the U.S. economy is in good shape."

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Finance
Many investors sell some of their losing stocks near year-end to book a tax loss, and that provides excellent buying opportunities for the rest of us, says MarketWatch columnist Brett Arends.
Arends, year-end, tax, stocks
281
2014-56-11
Tuesday, 11 November 2014 11:56 AM
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