December 12, 2024
By Peter Bower
This is the time of year when institutional investors make moves to finish their reporting year. Tax losses are often taken, portfolios are reevaluated and adjusted for the new year, and in some cases, liquidity is provided for payouts. There are a few other drivers too that affect stocks like window dressing. This is when portfolio managers want to show that their portfolios have the most successful positions and are absent losers.
Because of the many potential drivers of any individual stock price movement, these signals are unreliable indications of true fundamentals. Therefore, the Bull and his partners are cautious about drawing conclusions from this action. We are also looking for opportunities to pick up bargains that may be created by some of these near-term strategies.
A classic trading strategy is putting together a portfolio of tax-loss candidates. These companies may be sold off because they did not have a good year. However, if they have better longer-term prospects, then there is an opportunity to benefit when the selling pressure abates after the new year and the tax-loss selling is over. Have fun, if you are so inclined, and stay steady my friends.
-The Lonely Bull
