Stan in the Globe & Mail

It's open season on poorly performing stocks

November 22, 2016


…“Like an old pair of jeans that no longer fits, selling a security that no longer belongs in a portfolio for tax-loss purposes – and investment considerations – makes sense for almost all investors,” says Stan Wong, a director and portfolio manager with Scotia Wealth Management in Markham, Ont. He notes that tax-loss selling could be considered more powerful for individual investors in the highest marginal tax brackets.

…“Any decision to sell a security should be driven primarily by investment considerations, not just the desire to eliminate or reduce taxes,” says Mr. Wong. He notes that if an individual investor owns a security at a loss but it looks to be rebounding or has positive near-term fundamentals, it may be wise to stay with the security despite any advantages of tax-loss selling.

…Tax-loss harvesting is another strategy that investors should consider, Mr. Wong says. That’s the process of tax-loss selling but then replacing the sold security with a similar one, maintaining similar portfolio exposure and expected returns. He says shareholders of Nike Inc. should consider replacing their holding with shares of Adidas AG or Under Armour Inc., for example.

…Stan Wong of Scotia Wealth Management considers these stocks good tax-loss selling candidates given their uncertain financial positions:

  • BlackBerry Ltd.
  • Valeant Pharmaceuticals International Inc.

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