In a year when roughly 416 stocks have declined, most investors will likely have something to sell when tax season rolls around, contends an article in Barron’s. And while tax season is still half a year away, it’s a good time to start considering options for what’s known as “tax-loss selling”—offloading a stock at a loss in order to offset gains somewhere else in your portfolio.
Tax-loss selling, which generally happens late in the year, is expected to be very popular on this year’s tax reports, as active fund managers seek to protect their clients’ capital from incurring more losses, and retail investors look to use those losses in order to balance out the gains they had earlier in the year. And given that a mere 18% of stocks are seeing positive returns right now, there should be plenty of losing stocks to choose from, the article maintains.
Chris Senyek of Wolfe Research shared with Barron’s the stocks he expects to get hit the hardest: stocks that were down 35% this year, trading over double their float for the last year, and haven’t posted any gains for more than two years. Those that made the list were Netflix, Meta, Target and eBay, as well as tech company Nvidia, industrial giant Boeing, and healthcare companies Align Technology and Elanco Animal Health.
However, Bank of America Securities used different criteria to come up with their list of expected tax-loss selling stocks; that institution is looking at the stocks that have been sold off the most through October, as that’s when mutual funds have to complete their selling for tax purposes. Their list included Domino’s Pizza, Walt Disney, and Caesars Entertainment as well as Nvidia and Meta from Wolfe’s list, the article details.
One thing everyone agrees on is that selling is mostly completed by December 15th, and that’s when the stocks that have lost the most may be the ones to shine the brightest.