Tax-Loss Harvesting

By Hoda Mehr Tue, Dec 31, 2019

Hey Scoopers,

With only 24 hours left of 2019, investors rushed to sell some of their winners to lock their gain.

Other than reviewing the overall market, we added three stocks to our 2020 Watchlist. The first one is a Chinese startup with the aspiration to lead the electric vehicle market in China. Also, it seems that two new IPOs are shaping the future of work, and we added them to our 2020 Watchlist to add some future-shaping flare to our new year’s investment research.

Oh, and by the way, have you harvested your 2019 tax-losses? — more on that in the “Water Cooler” section.

Also, don’t forget to scroll down to the “Overall Market,” “What’s Up?” and “What’s Down?” sections to learn more.

Market Recap

• • U.S. markets: All three indices remained relatively flat on the last Friday of 2019. Scroll to the “Overall Market” section to read more.
  • Cryptocurrency: Bitcoin’s price finished the week above the $7,000 market.

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No clear reason for a red day…

The last Monday of the year finished in the red. There was no single clear reason to point to explain why the market dropped on Monday.

There were talks of hedge funds selling options to protect themselves from a catastrophic decline in early 2020. There were also concerns about U.S. military strikes in the Middle East over the weekend. There was also some tax-loss harvesting happening on Monday.

Sometimes the market just goes down, and there is no way for anyone to know why. That’s what happened on Monday.

Running out of cash didn’t scare investors.

Shares of NIO (Ticker: NIO) were up more than 60% on Monday. NIO Inc is a 2018 IPO that is making electric vehicles (EVs) in China. However, launching an EV startup in China is no easy task. There are Chinese automotive giants that lead the market, and NIO Inc has a tough task of fighting for its market share. That’s why it was no surprise when the company announced it was about to run out of cash in the last quarterly earnings. The risk of running out of cash still exists even though the company just announced a better than expected quarterly earnings on Dec. 30th. Investors who were hoping for any good news went out of this world and decided to send the stock to the moon with more than 60% jump in one day. .

While the market opportunity is grand, the risk of running out of cash is worrisome. This is an addition to our 2020 Watchlist to see whether the company can pull itself out of the cash crunch. For EV investors this is no new frontier. Every now and then, those of us that are Tesla (Ticker: TSLA) investors face a similar cash crunch threat. We guess that’s the reason investors are not running for the hills.

The future of work or a pipe dream?

Shares of Fiverr (Ticker: FVRR) were down more than 7% on Monday. The company is one of the latest 2019 IPOs that connects freelancers with projects and contract opportunities. You need a designer, find it on Fiverr. You need a voiceover artist for your podcast, search it on Fiverr. The company along with its rival, Upwork (Ticker: UPWK) are the investment candidates for stocks that are shaping the future of work. Both stocks are added to our 2020 Watchlist to add some future-shaping flare to our investment research in the new year.

Have you harvested your tax-losses?

So what happened?

There is only one trading day left in 2019, and investors are selling their winners to lock their gains. That’s most likely the reason why on the last Monday of the year, several high-flyer stocks such as Roku (Ticker: ROKU) and Trade Desk (Ticker: TTD) dropped quite a few percentage points. It’s the tax-loss harvesting season.

Harvesting what?

Tax-loss harvesting refers to the process where you plant a tax seed early in the year, and harvest it in December…

Wait, what? Just joking … You don’t have to plant any seed to harvest your taxes.

All you need to do is to sell your winners and losers before the end of the year, and you’ll be able to avoid paying taxes on your gains equal to the amount you have lost with some of your losers, up to the amount the tax regulations allow in your country. Tax harvesting is a perfectly logical reason why you would sell stocks, especially if you have a few losers in your portfolio that give no reasonable evidence to believe that the stock can recover in a few months.

With only one day left from 2019, have you harvested your tax-losses?

About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card