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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 681.44+1.6%Nov 10 4:00 PM EST
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To: Michael Watkins who wrote (63545)12/2/2000 4:02:19 AM
From: Herschel Rubin  Read Replies (3) of 99985
 
Let's discuss the potential for tax-loss selling this December...

QUESTION: Would anyone like to comment on the possibility that there may not be a significant tax-loss selling season this year at all?

RATIONALE: Unlike last year, where the Nasdaq soared 85%, this year many investors' portfolios are in the red. Without significant profits to show for the year, I'm not expecting people to be doing much tax-loss selling. Many have had to sell out because of margin calls on the way down, so their portfolios are at a loss.

There is also the $3,000-per-year cap on writing off capital losses each year, and many people probably have exceeded that threshold by a long shot.

The only people who would have "the luxury" of doing tax-loss selling at this point are those who cashed out at the top of the March bubble, but those prescient individuals are probably in the minority.

Other suggestions have been that there may be selling pressure due to people liquidating to buy Chrismas gifts, but most would be selling at a loss to do so and we all know the studies that say investors tend to stubbornly cling to their losing stocks.

Comments/counterpoints welcome...
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