2 Year-End Tax Bounce Investments
Two year-end tax bounce candidates with potential good news kickers in the New Year were made for one of our portfolios.
Every year investors who have more realized gains than losses comb through their holdings and sell losers on their books, so as to avoid paying capital gains tax by April 15. This creates unusual selling pressure on the worst performing stocks of the year at year end, as tax selling adds additional pressure to a company stock that is tax related and not economic . As we move into the New Year, there will be an abatement to that tax selling—as this tax selling largely occurs between November 15th and December 15th--and these stocks, known as “tax bounce candidates” can experience a tradable move of 10%.
I am highlighting two stocks I bought for a portfolio as tax bounce candidates. They are Delcath Systems Inc. ( DCTH ) and Genoil, Inc. ( GNOLF.OB ). Both stocks are off about 75% on the year and both should see important positive news announcements in the January timeframe. If those news events occur, the upside in both stocks could be significantly higher than that of the tax bounce opportunity on its own.
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