Tax Loss Trades: Take the Money and Move On
Sell those seasonal bounces, don't marry them.
Today we look at the tax loss trades.
Briefly, the trade is to buy poor-performing stocks that have been excessively sold down as North American investors crystallise losses before year end to offset gains elsewhere and reduce their tax bill. It is a seasonal liquidity distortion. Not a valuation call. Not a long-term judgement call on any of the companies. It’s a flip.
This year the trade began well. We saw quick profits across several positions.
As things wobbled I moved stops higher. I am glad we did. What were originally winning positions turned into losers. I have now exited most of these flat. More in a moment.
Lesson number one: if you are given a quick profit in the tax loss trade, take it. This is not a “let it run” strategy.
For reference, here is the original piece, with follow ups here and here.
