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:

  • The Green Organic Dutchman (TGOD.TO)
  • Canopy Growth Corp. (WEED.TO)
  • OrganiGram Holdings Inc. (OGI.V)
  • Aurora Cannabis Inc. (ACB.TO)

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.

That Was a Fun Week

by JDH on December 8, 2018

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.

Resorting to Gambling

December 1, 2018

As the market bounces around, doing not much of anything, and we are left to wonder whether or not 2018 will finish in the red or the black, I’m now resorting to outright gambling. In many cases I’m a speculator, not an investor, which is practically gambling anyway.  My biggest bets of 2017 and 2018 […]

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American Thanksgiving

November 24, 2018

It’s what we in Canada call the “American” Thanksgiving, although I assume Americans just refer to it as “Thanksgiving”.  I worked all day Thursday so missed the day football games.  Next year I will have to remember to book the day off. The stock market did the same, with nothing much happening, but here’s my […]

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Nothing, or Something

November 17, 2018

Year to date, the Dow is basically flat.  Will it stay flat, or crash, or go up? Historically, the period after mid-term elections tends to be strong, so it’s possible that the market is about to take off. However, interest rates are creeping upward, and important stocks like Apple have experienced some weakness of late.  […]

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Pot Stocks Down, But at Least I Made Money on Trump

November 10, 2018

We’ve seen this movie before.  The media says Trump is going to lose the election, and then he wins, and the markets go up. So, on Tuesday, I bought SPX calls, 2770 strike, expiring on Friday, for an average price of around $14.00 On Wednesday, after Trump lost the House but increased his seats in […]

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The Green Organic Dutchman – What a Week

November 3, 2018

The market for cannabis stocks in Canada has been, to put in mildly, a roller coaster, and no stock exemplifies this more than TGOD.TO – The Green Organic Dutchman. It started trading after it’s IPO at around $3.50 in May, bounced to $8 in June, pulled back to $5 in August, and then hit $10 […]

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Fun Week for Tesla

October 27, 2018

Let’s review: Tesla was in a down-trend, and then they announced that they would announce their quarterly earnings early.  Pre-earnings the stock was trading below $255; after earnings on Tuesday it bumped up to $295, and after a pullback on Thursday closed the week at just under $331. That’s show those shorts! Not really. Yes, […]

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Not Over Yet

October 20, 2018

So, the “big crash” happened last week, and the world didn’t end.  Ho hum. I’ll keep this brief: the bull market is not over yet.  We just observed a nice correction, to allow the Big Boys to load up on more “bargains”, so they can do it all again.  Lather, rinse, repeat. Tesla closed at […]

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The Big Crash (Sort Of)

October 13, 2018

As you all know, on Wednesday the market “crashed”, or corrected, or went down.  Further weakness on Thursday brought the broad averages all the way back to where they were in August. mid-August. Yup, we suffered through the “lost eight weeks”.  Clearly a catastrophe. I’m holding a lot of cash, so I wasn’t paying any […]

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