The final quarter marks the traditional time of year when kids dive into leaf piles, heating bills rise and investors with taxable accounts sell underwater stocks to help lower their tax bills.
They shouldn’t have too much trouble finding candidates this year. Despite a recent uptick, most major indexes remain in negative territory for 2011, and with market volatility in high gear more dips could be on the way.
Tax loss harvesting helps ease the pain of a down market by allowing investors to use the losses to offset gains and up to $3,000 of ordinary income on their tax returns. But you have to wait at least 30 days after the sale of a losing stock to buy back the same security. Otherwise, the IRS calls it a “wash sale” and you can’t deduct the loss.
While someone might use a similar stock as a placeholder in case the market bounces back, that option isn’t ideal because performance can vary significantly among stocks in the same industry. Mutual funds covering similar investment turf don’t always move in sync either.
Few will debate that the months ahead will be challenging, and that the extreme market volatility will continue. There are a number of steps you can take with your adviser — or on your own — to weather these changes.
The first thing to consider is that the cards are lining up for the U.S. and European economies to backslide into recession. The Economic Cycle Research Institute is calling for two quarters of negative growth. The European sovereign debt crisis is like a wounded beast. The Federal Reserve doesn’t seem to be able to help, despite lowering short and long-term interest rates.
For many, this is an obvious no brainer, but it involves much more than simply shifting into cash, bonds or gold. What if you don’t want to exit stocks entirely? Then you may need what money managers call tactical asset allocation.
When Donald Trump accepts gold bullion as a security deposit for one of his buildings, is it time to bail out of the yellow metal as it heads for its worst month in three years?
However you interpret gold’s recent slide — or the Trump factor –either the pale metal has lost its luster for now or large investors have ratcheted down their fear levels. Either way, there’s going to be more downside volatility in that market.
Juliette Fairley is a frequent commentator on Better Home and Garden TV. She has written for the Wall Street Journal, the New York Times and USA Today. The opinions expressed are her own.
Balance is a rare bird these days. Jobs, housing, stocks, European debt: All seem to be in a spasmodic tailspin.
There is some consolation that a balanced portfolio can help smooth out the jagged curves of a bipolar market economy. But balance is rarely what we think it is, and it needs constant monitoring.
Is my head in the clouds? As darkly volatile as this moment in personal investing may seem, it’s actually a golden age for portfolio insurance. Retirement worries as we know it can come to an end — if you know how to hedge properly. There are plenty of retail tools available to that end.
It’s too soon to tell and most of us will guess wrong anyway. As Washington and global traders sort out the impact of the U.S. “Tea Party debt downgrade,” you should employ the best hedging strategies possible.
With the recent U.S. and Euro debt crises introducing new uncertainty, volatility will be the name of the game. As the frenzy of new fund offerings abates, many funds may close because they will be unable to attract sufficient assets. But a handful of safeguards can protect you.
The following is a guest post written by Marianne Paskowski, who was vice president of Reed Business Information’s Television Group. Today she manages her extended family’s portfolios from Cape Cod.The opinions expressed are her own.
So how do you make money in this horrible market? Being semi-retired, I just can’t sit on a pile of cash. But today is the ninth consecutive day that the markets are down. Last Friday was a stinker too, when we saw Gross Domestic Product was only up 1.3 percent. On Tuesday, we heard from the Commerce Department that consumer spending slipped 0.2 percent. Oh, and how can I forget, we have U.S. job data hitting this Friday.