As we approach the end of 2017, investors considering re-balancing their portfolios will be making some tough decisions related to taking money off the table in the form of profits, or selling losers and reducing tax burden heading into the New Year.
The traditional advice given by many tax advisors is to limit tax exposure in the short-term by selling losers and holding winners during the last two months of the year; by creating capital losses and taking a bigger tax refund, investors will theoretically be able to buy back the stocks sold during the last two months of the year at the beginning of the year and reinvest the tax refund accordingly.
Astute value investors with a long-term investment mandate have typically picked the tail end of the year as a key period of time to search for and buy undervalued stocks which have taken larger than normal hits due to tax-advantage selling.
For investors with few capital gains (those who buy and hold for long periods of time), picking up shares of already beaten up companies at a further discount may be the way to go.
With the stock market today experiencing much of the same exuberance as during previous market bubbles, and with many analysts suggesting this near-record bull market may be on its last legs, the decision as to whether to continue to buy winners and sell losers is a difficult one.
Invest wisely, my friends.
