At the start of October the DOW was just under 27,000, and on Friday it closed at 24,388. Not quite a 10% drop, but whose counting; that’s something of a blood bath.
Alternate viewpoint: DOW is now back to where it was at the start of July, so we’ve had 5 months of no gain; not quite as scary when you put it in those terms, eh?
Pot Stocks
The Pot Stocks have had a rough time of it. My favorite, TGOD.TO – The Green Organic Dutchman, touched $10, briefly, in mid-September, and touched $2.50 a few days ago. That’s not pretty.
Alternate viewpoint: The December, 2016 financing was done at 50 cents. The October 2017 financing was at $1.65. It closed on Friday at $3.17, so compared to 50 cents, or $1.65, that’s pretty good.
Am I panicking? No. Those who participated in early stage financings are still looking good. The market got way to far ahead of itself, and now it has over-corrected. At these levels I’d be buying, not selling. I plan to place some stink bids for later in the month, so that everyone who is selling for tax losses can be my source of cheap shares.
It is highly likely that the Feds in the USA will push this issue to the States, which means that marijuana will be legal almost everywhere in the States by the end of 2019. That will cause a similar bump in prices that we saw in Canada, and that will be the time to take (big) profits.
The tobacco companies are starting to buy these stocks, and that will give them a great bump as well.
Of interest this week was Aphria, that got slammed by the short sellers. I didn’t own it, but I bought some for $5 on Wednesday, and sold them for $6.78 on Friday, so for two days of work, I’m happy.
I’ll be buying more of my prime holdings at a price slightly higher than the lows, on the assumption that the lows will hold. We shall see.
Gold
It’s possible that gold’s 4 year slide is over, and 2019 will be a better year, but I’m not committing any funds to it, yet. I’m not yet convinced.
As of today, those are my thoughts (which may be completely different tomorrow). More next week.
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Bargains During Tax Loss Season
by JDH on December 15, 2018
As you all know, if you have a losing position on a stock, if you sell it you have a capital loss, which can be applied to reduce the taxes you owe on any capital gains. That’s why investors sell their losers before the end of the year, so that they can apply their losses and reduce their taxes owing for the current year. Waiting until January to sell your losers means you have to wait a full year to get the tax benefit.
In Canada and the USA, the last date for tax loss selling is December 27, 2018, because the trades must close by December 31.
This post is not about tax loss selling. You can decide for yourself what losers you want to sell.
Two points: if you hold your losers in a TFSA or RRSP it doesn’t matter; you don’t pay tax within the plan, so it’s moot. Second, if you sell a loser and then buy it back within 30 days, you can’t deduct the loss, due to the superficial loss rule in Canada, so if your loser is likely to recover and is a long term hold, then there’s no point in incurring the transaction costs to sell it.
So if others are selling their losers, that should drive prices down even lower, giving you the opportunity to load up on bargains. Here are some bargains to consider:
First, pot stocks. They had a great run, so if you started buying in 2017, you are up, so you have no losses. But, if you were buying near the peak, you’ve got losses, and those are the stocks that have probably over-corrected, and will likely bounce higher in 2018. My favorites:
Second, gold stocks. They’ve been hammered the last few years, so inevitably they have to correct. I’d start with Equinox Gold Corp, EQX.V, which did a financing at $2 and is currently sitting at 94 cents, and it’s good great management, good properties, and cash, so if a stock is going to pop, this is the one.
Of course you could also buy Apple or Amazon, which are down significantly from their highs, but I have no opinion on what they will do in 2019, so you are on your own.
It hasn’t been a great year for most investors, but that doesn’t mean you can’t avail yourself of some bargains.
And yes, I am still short on Tesla. It will crash in 2019, but I’ve been wrong all the way up, so govern yourself accordingly.
Thanks, and have a great week.