Stock Market-Time For Year-End Action
Stock Market News
Stock Market-Time For Year-End Action
Before we look ahead, letâs not forget that taxes are one aspect of your investment strategy where you do have some control - if you act now. December is the time to make sure you keep as much of your 2004 investment income as possible. Your tax advisor can work with you on your specific situation, but here are a few "broad brush" pointers:
- Sell losing stocks (that are not tax-sheltered) to offset capital gains realized from other investments in your portfolio. If you have no gains to offset, you can still realize losses and use them to reduce up to $3,000 in ordinary income.
- Reorganize your portfolio with taxes in mind. Donât fall foul of the "wash-sale" rule. You will forfeit your tax-loss benefit on a laggard if you buy a substantially similar investment within 30 days of the sale of the loser.
- If you plan to off-load shares of a fund that is losing money, do it as soon as possible. The fund may be distributing capital gains near year-end - despite being down for the year - and so, in effect, will be preparing a tax bill for you.
- If you plan to give stocks to your children or to charities this holiday season, your tax professional can outline possible tax benefits that may benefit both you and the recipients.
December is the time to review your investment strategy for the coming years, too. Letâs take a look at what some experts are predicting:
- The rebound in the economy suggests that we probably wonât see a major bear market for a while. Many bullish analysts believe that the patchy nature of the recovery has left some sectors undervalued, and that many growth stocks have been beaten down to levels that represent real buying opportunities. They anticipate that corporate spending is slated for a much-needed boost, and that this will help many technology companies who have lagged behind the overall market.
- Dividend paying stocks - especially from the larger, blue chip companies - look as if they will continue their strong performance for a while.
- Although many factors influence the market, some experts anticipate that certain sectors will get a boost from another four years of Republican control of the White House. Some fund managers and other experts predict that health care, financial services, utilities, energy, and military contracting will be among the winners in Bushâs second term. There is little consensus among these experts as to which specific segments or companies might offer the best investment opportunities. However, pundits who favor energy stocks tend to steer their clients away from the major, global corporations and more towards producers with operations in North America, or ventures outside the volatile Middle East. Many experts believe that oil may not reach or exceed recent peaks but that prices will continue to make more exploration ventures economically feasible.
- Some experts believe that the overhaul of Social Security will place more investment control into the hands of individuals, and they recommend stock in financial institutions that provide asset management or financial/retirement advice. Others think the contentious nature of the issue means that we wonât see any major changes anytime soon, or any flood of money into the market.
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.