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Rest of year (December)?, I'll vote for this

Tampabay
in Off-Topic
Bottom Line

The bulls remain firmly in charge of this market, and underlying forces including seasonality are also supportive for further upside in the near-term. We have seen stocks decline to close out the year in December on rare circumstances, but even when such instances occurred, the magnitude of the decline has typically been relatively small. The bears will have their day, but for now this is a market that belongs to the bulls and is likely to remain so at least for the next several weeks. For despite some signs of underlying weakness in U.S. small caps (NYSEARCA:IWM) and high yield bonds (NYSEARCA:HYG), this appears to be a market that is setting up to enjoy clear sailing through the end of the year and into the next.
http://seekingalpha.com/article/2704625-stocks-clear-sailing-into-2015?ifp=0

Comments

  • beebee
    edited November 2014
    Not sure what percentage of the equity market in held in taxable accounts, but this year might have higher than average tax related maneuvering come December.

    Probably more of an attention grabbing headline event rather than a market bear...

    "Investors run for the hills prior to end of year distributions".

    Wait two days and headlines will bullishly read...

    "Investors pour back into the Market"

    A read on the topic:
    Investor Beware of Year-End Capital Gain Distributions!
  • MaxBialystockMaxBialystock
    I'm (still) loving-up all those pay-outs. No worries here. Over 90% of my stuff is still in tax-sheltered accounts.
  • ronorono
    Howdy,

    Whelp, for the Santa Claus rally, should one occur, you want to be into your 'all in' position this coming Black Friday.

    and so it goes,

    peace,

    rono
  • rjb112
    bee said:

    Not sure what percentage of the equity market in held in taxable accounts, but this year might have higher than average tax related maneuvering come December.

    Investor Beware of Year-End Capital Gain Distributions!

    "This year, we have identified several funds that are distributing capital gains of 40% or so of their net asset value. This means that you could invest $10,000 in a mutual fund and the next day receive (and be taxed on) a $4,000 distribution – even though your total investment in the mutual fund is still only worth $10,000."
  • Tampabay
    Guess I'll have to take the money (distributions) and reinvest in more shares of MY funds making all this money, Tax planning is stage 2 and almost a daily thing if your making money....if your not then I could see a problem with distributions
  • JohnChisum
    "This means that you could invest $10,000 in a mutual fund and the next day receive (and be taxed on) a $4,000 distribution – even though your total investment in the mutual fund is still only worth $10,000."

    Yes, but you have more shares now.
  • beebee
    edited November 2014
    JohnChisum said:

    "This means that you could invest $10,000 in a mutual fund and the next day receive (and be taxed on) a $4,000 distribution – even though your total investment in the mutual fund is still only worth $10,000."

    Yes, but you have more shares now.

    And a $4,000 capital gain tax bill on a 2 day investment...ouch!

  • JohnChisum
    edited November 2014
    "And a $4,000 capital tax bill on a 2 day investment...ouch!"



    Yep, that is a big ouch.

  • Tampabay
    Give me a 40% distribution ($4000) I have my $200 hr tax man work on it...
  • Valet
    Got a $4,000 long-term capital gain distribution on a 2-day investment? Selling it before year-end will take away much or all of that "ouch."

    Example: Using money in his taxable account, Bob purchases $10,000 of XYZ fund on Dec 1st. The fund makes a surprise long-term capital gain distribution of $4,000 on Dec 3rd. Ouch? Yes, Bob has to report an additional $4,000 in capital gains his tax return, but he can sell the fund before year-end. Assuming he sells right after the distribution, he has a $4,000 loss that he can use to offset the gain. (Following me? Bob's cost basis went from $10,000 to $14,000 - if reinvested - when the distribution happened; he sells the fund for $10,000 and locks in a $4,000 loss.) Lemonade out of lemons.

    This is certainly not the ideal situation, but this strategy could help the boo boo.

    This will not help if the fund kicks out a short-term capital gain as these are reported differently - they are considered ordinary income and capital losses do not directly offset them.

    Is there an opportunity here to get a long-term gain from the fund and lock in a short-term loss? No - the IRS saw this coming. See Pub. 564 "Capital gain distribution before short-term loss" for details and an example.

    I'm going to write an article about this on CapGainsValet.com.

  • Tampabay
    edited November 2014
    Val:As I said above I pay well for tax advice, preparation, and use tax planning, It always seems to work out..... for my financial well being
    If you don't seek "paid" expert tax advice maybe you should, you won't have to read all those publications....PS: I also don't fix my car, or my sink, or drill my teeth, but that's just me
  • catch22catch22
    @Valet
    Thank you for your efforts.
    Take care,
    Catch
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