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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: Lutz Moeller who wrote (3144)	10/22/1998 10:41:00 AM
From: Tom_	Read Replies (2) \| Respond to of 4509

More on mutual fund tax loss selling... Hi Lutz! My (inexpert) understanding of mutual fund tax loss selling: Mutual funds aren't having a good year this year. They will be showing low gains for their shareholders. This is one bad thing. And, on top of that, another bad thing is that the shareholders will have to pay taxes, at the end of the year, on those stocks that the funds sold during the year for a profit. It's what we call a "double whammy"--two bad things: low gains, plus taxes. So, the funds, in order to keep their shareholders relatively happy, often try to reduce the amount of taxes the shareholders have to pay. They do this by selling off those stocks in their portfolios which have gone down dramatically during the year. These losses thus offset the profits from the stocks sold for a gain, and the shareholders pay less tax. This "tax-loss selling" for MF's is evidently as a "general rule" over by the end of October (see the link posted on my #3078). Individual investors also do tax-loss selling each year, usually in the last quarter of the year--they are not limited to doing so by the end of October. That was the distinction behind Melissa's query about this subject, I believe. The end-point of all this is that IMO PSFT, down so very dramatically, is an obvious candidate for tax loss selling. I hope this helps. It may even be correct. Tom