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Strategies & Market Trends : January Effect 2001

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To: RockyBalboa who wrote (85)12/23/2000 12:05:27 PM
From: Dana Merrill  Read Replies (1) of 289
 
Interesting twist on end of year tax related selling, and I have no doubt this does occur. However, it would seem to me that most people would be aware of the upcoming tax liabilities and would sell some of their newly acquired stock to cover it at the same time they exercise their options - not at the end of the year in a panic because they suddenly realize that they will have a large tax bill they cannot pay.

The tax liability has been present ever since the options were exercised and should come as no surprise. Furthermore, some tax payments are likely due before the end of the year to avoid under withholding penalties.

-dam
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