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No. of Recommendations: 6
Market anomalies do not last forever, but they do return! At least that is my theory.

The heyday of tax loss selling for me was 1998 and 1999. Back then I could buy small-cap value stocks that had nothing to do with the internet, computers, telecommunications or donuts (remember Krispy Kreme) at PE ratios of 4 and less than half of tangible book. If there was some debt or a hint of possible risk you could be buying at 10-20% of tangible book.

Back then you could buy in December and by late January to early May have a two-bagger to four-bagger. Of course, not on everything you bought in mid-to-late December doubled, but enough of them did to make it quite profitable.

I think that buying in response to TSL worked so well back in 1998 & 1999 for the following reasons.

1) Having an extremely bifurcated market, i.e. a lot of things going up a lot and a lot of things going down a lot.
2) A higher tax rate, especially on capital gains.
3) Market participants that were either not that sophisticated or lacked a sense of market knowledge or history.

At the end of September, we had #1 in spades, but less so now. We have #3 in spades. The Bush, and subsequent, tax cuts have reduced #2 for the time being.

I have had 4 REIT ten baggers OHI, LTC, DDR & FR. What they had in common is that I bought them all after they eliminated their dividends. I once saw an older established REIT (NPR/NXL) drop 25% after announcing that it would no longer raise their dividend 0.25 cents each quarter.

Back in the spring I put less into grocery anchored REITs than I otherwise would have because I thought that it was very possible that they would reduce/eliminate their dividend and I worried (or hoped?) their share price would drop significantly after the cut. All four (KIM, BRX, KRG & RPT) all ultimately eliminated their dividend. After which pretty much nothing happened! After many years of watching stocks get walloped after dividend cuts/eliminations market learned.

Markets, meaning investors, learn and adapt. However over time they often seem to forget and repeat.
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