So this year’s tax-loss selling set-ups was unlike any I have executed over the past several years – the late-year selling in the overall market made it unlike any year-end that I can remember being a part of. I think I heard something to the effect that this past December was the worst in performance terms that the market has seen going back to I believe 1931.
So in the end, I was busy trading the market into year-end/early January, but I wasn’t really focused on tax-loss selling candidates. I ended up with only three positions that came out of my work … I continue to hold call March call options in VLO that I may end up taking profit in and rolling the strike up from the $70 level that I own currently – the stock is at $82.68 and it makes sense to roll it up to say $80, book a winner and let it go for another month or so.
My other oil & gas play was in APC ($55 call strike) and it expired worthless yesterday. My only other tax-loss position was in January 250 NOC calls which I sold it for a nice little win on Thursday.
So overall, tax-loss candidates were a real non-event for me this year … that almost guarantees that it will be a big factor next year!!
Here is the final data/watchlists that I was monitoring/keeping track of …
The above charts shows how the market basically bottomed together on Dec 26th … that is so unusual for my tax-loss strategy, but like I said earlier, it has been a strange/non-typical year this past year.
Watchlist Sorted by Change Since Nov 30/18
The above chart is sorted by the percentage change in stock price from the Nov 30th closing prices – note that only 17 out of the 45 stocks on the list are above their Nov 30th closing prices. The leader is GE, and that was one name that I did not want to trade because of the low price level of that stock – it didn’t make sense to trade using options, and I didn’t feel like trading 10,000 shares in a name that was facing questions about possible bankruptcy.
Watchlist Sorted by Change off of Dec 2018 Lows
The above watchlist is sorted by the % increase off of each stock’s December lows – the leader was Nektar Therapeutics (NKTR). That stock bounced 58.11% off of Dec low of $29.22. Note that 7 out of the top 10 on this list were energy stocks – that what I was referring to when it makes sense to look at the list every year in terms of sectors, because there may be other stocks from common sectors in that tax-loss list that a trader can trade in addition to the actual tax-loss candidates … sectors often bounce together.
The above chart is the final summary of all that has happened in these names. The thing to note is on the bottom right … you can see that in all respects, most of the names on this list outperformed the overall market (using the SPY as the reference) out of the Nov30th levels, the Dec lows, and the year-end prices.
If you look at the average for the watchlist, the change from the Nov 30th level was -0.8% vs the SPY at -2.6%. The change from the Dec lows averaged +25.4% for the watchlist vs +14.1% for the SPY, and finally, the change since Dec 31st for the watchlist average was +15.9% vs +6.8% for the SPY.
Note that all of the final price data utilized was adjusted for any and all dividends paid by the SPY and the watchlist names.
So again, I think that this strategy will be big value-added next year as I can’t imagine having two back-to-back year ends like the one we had this year.
Cheers … Leaf_West