I remember the late 1990's when there was massive tax loss selling of value stocks in Dec 1998 & 1999. Prices often fell to ridiculously low prices only to rebound in Jan thru Apr - varied somewhat.People had a lot of gains from the market darlings of the late 1990's and often sold their losers indiscriminately late in the year. Today there are select stocks and sectors with massive gains and no shortage of stocks down for the year or multi-years. Except for the fact that taxes are lower today, it could results in some major down forces on a lot of stocks late in the year?In REITs, no shortage of down stock. Major REIT sub-sectors with depressed share prices include retail and lodging. I own enough retail REITs already, all grocery focused, and feel retail has certain headwinds beyond the current pandemic. Lodging is not my favorite sector as I believe that neither GAAP or FFO adequately covers the massive renovation costs that lodging seem to continuously goes through. That said, I wonder if post-vaccine, there will not be a LOT of pent up demand for travel. If the share price of lodging REITs get really depressed in December, why not pick some up for a quick early 2021 rebound?Or is this too obvious and they will be massively traded up on any vaccine news?I will be looking for tax-loss selling in the most down industries in December including lodging, travel, financial and energy.
Hi VM!I share your thoughts/memories regarding tax loss sales. My approach this year will be to make my tax loss sales early....and then buy back selected names during the December sell off, So long as my buy-backs of the same names are 31 days beyond my early sales, no wash rule impact and probably a great price coming back in.Of course, in the REIT space, one has to really study to decide which ones will be the best to rebuy...or initiate a new position.Cheers!MurphBL and MFPP Home Fool
Hey VM and Murph!Interesting thoughts, observations and ideas.Only problem for me is that all of my losing REITs are in a tax deferred account. David
Hey David!Well, we "old timers" tend to have a greater % of wealth in taxable accounts, since we actually started saving/investing before IRA's were "invented"....and even after they were, the amounts one could put in were paltry in those early years.Ah well....and the beat goes on. ;-)Cheers!MurphBL and MFPP Home Fool
I put away all the losses that I need (and more than I wanted) in late April to mid-May. I once read a very smart piece on taking one's tax losses by the end of June and that is what I try to do. My original post, was not so much about taking tax losses as "hopefully" benefitting from those that do. In the REIT area, one I am looking at is SHO. Lodging REIT with great balance sheet, but as with most travel stocks VERY poor recent performance. A vaccine could end that recent poor performance and hopefully enough people will still have enough $ left to travel. I hold and have sold a bunch of small to medium banks stocks that are currently in the low $20's. I am prepared to both buy more in the mid-teens (barring much further economic erosion), but am equally willing to sell some of them in the upper $20's and perhaps all of them in the $30's again somewhat dependent upon the economic/pandemic situation. I am currently both selling life insurance companies after a few up days and buying them on significant dips. My last area of interest is energy. I have only bought natgas related stocks this year. Fundamentals are quite positive, but as always the known unknown is WEATHER.
In taxable accounts, the risk with TLS is the price will rise above the amount of tax savings during the 30 day wait, so its generally a good strategy to sell/replace with a similar stock. Also, keep in mind that if there are not offsetting realized capital gains, only $3,000 of the capital loss can be used per year as negative ordinary income, with unused capital loss carried forward indefinitely until used up.I think any of the hospitality stocks, to include casual dining, cruise lines, airlines and hotel/motel/theme park/entertainment REITs, with a history of competent management, are terrific value plays today. Of course, we don't know how long it'll take to get back to 'normal'. And in talking to my retired physician friends, I'm not so sure a vaccine will be the finish line. Corona viruses, like other cold viruses, have not responded well to vaccine effectiveness...which has historically not been very high for elderly at higher risk for a corona virus. But let's keep our finger's crossed.BruceM
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