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.
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.