Opportunities from tax-loss selling

A large part of financial media attention this week has been directed towards our market going lower due to “tax-loss selling”.

Tax-loss selling occurs when investors seek to lock in a capital loss in order to claim a taxation benefit against other income earned throughout the year.  While investors can actually sell at any time throughout the year and still claim a tax loss on a poor investment.  Many investors see the benefit of taking losses leading up until June 30 in Australia as it is the closest point to getting the tax benefit of selling at a loss.

While some see the end of financial year as an appropriate time to ‘clear the decks’ and sell their losers, it is a good time for net buyers of shares to go hunting for opportunities to pick up some quality shares at irrationally low prices.  After all, one man’s (or woman’s) trash is another man’s treasure.

One good place to start looking for overdone tax-loss selling is in company’s trading at or near their 52 week lows.  And, in the current environment, there is plenty to choose from.

This article is published by Dean Mico.

The information provided in this article is intended for general use only.   The article is intended to provide educational information only.  Please be aware that investing involves the risk of capital loss.  The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

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