Tweet
A classic mistake of any individual investor is to maintain a position in a money-losing stock for too long. You calculate, you reason, you infer, you hope and, finally, you pray that it will come back. And still you hold on.
If you didn't, how would you prove you were right to have bought it in the first place?
That kind of thinking gets investors nowhere. The truth is, with money-losing stocks, it's often better to unload them and move on -- especially at this time of year when you can turn at least part of that investment loss into tax savings. (See more year-end tax tips.)
Review your portfolio. If you have a sizable loss and don't see a catalyst in the next few months that could drive the stock higher, sell now and reap the tax benefit. If you love a company, you can always buy it back next year (but be sure to wait at least 30 days so you don't violate the "wash sale" rule).
The following is a list of six companies covered at Blogging Stocks that are year-end "sell" candidates. These stocks are all down significantly year-to-date, face headwinds going forward, and -- perhaps most importantly -- have a tendency to inspire a somewhat irrational loyalty among the individual investors who own them. As they say in the dating world, maybe it's time to "take a break" from these names:
Yahoo! Inc. (Nasdaq: YHOO): It's still an Internet leader, to be sure. But competition from Google Inc. (NASDAQ:GOOG) is slaying this one-time giant while smaller, more nimble competitors are encroaching on its turf. Meantime, recent management reshuffling signals more turmoil ahead. The stock started the year at $41 and is now at $26 for a 36% year-to-date drop.
Sirius Satellite Radio Inc. (NASDAQ: SIRI) and XM Satellite Radio Holdings Inc. (NASDAQ: XMSR): A word of apology to all the fans of satellite radio out there. I know you love these stocks and are rooting for them to turn around. Maybe they will someday? But as Doug McIntyre wrote recently, it seems the more their businesses mature, the worse the stocks do. Sirius is down 42% this year and XM is off 47%. That's a tax loss you can take to the bank.
Whole Foods Market, Inc. (NASDAQ: WFMI): This is another stock we know you love to love. But don't confuse your obsession with organics with a good investment. Whole Foods was once a great growth stock, but now it's getting punished for disappointing Wall Street's inflated expectations. It is down about 36% year-to-date and it seems there is plenty of room for more disappointment ahead. WFMI still has a price-earnings ratio of 34, which is darn high for a grocery store.
TD Ameritrade Holding Corp. (NASDAQ: AMTD): Can anyone spell F-R-E-E T-R-A-D-I-N-G? That's the main blow that has hammered Ameritrade's stock. It is down 30% this year. Some analysts, including Jim Cramer, think the selling has been overdone and AMTD is a good buy at its current price of $17. But there isn't a rebound in the making yet and competition in the still-crowded discount brokerage may get worse before it gets better.
eBay Inc. (NASDAQ: EBAY): The auction king has had a tough year -- with competition increasing (especially for Skype, its expensive Internet telephony acquisition) and slowing growth. It has even had to deal with a revolt among top sellers on its service as it changed its pricing in an effort to make its core auctions business more attractive to shoppers. The stock, now at $32, has been coming back lately as some analysts (again, including Jim Cramer) find it cheap. But it is still down about 27% year-to-date. Will the holidays be good for eBay? As a one-time eBay shopper, I'm skeptical. There remains a long-term risk to the stock that too little customer service and too much monkey-business by scammers will erode market share in the year to come.
http://www.bloggingstocks.com/2006/1...er-selling-now
If you didn't, how would you prove you were right to have bought it in the first place?
That kind of thinking gets investors nowhere. The truth is, with money-losing stocks, it's often better to unload them and move on -- especially at this time of year when you can turn at least part of that investment loss into tax savings. (See more year-end tax tips.)
Review your portfolio. If you have a sizable loss and don't see a catalyst in the next few months that could drive the stock higher, sell now and reap the tax benefit. If you love a company, you can always buy it back next year (but be sure to wait at least 30 days so you don't violate the "wash sale" rule).
The following is a list of six companies covered at Blogging Stocks that are year-end "sell" candidates. These stocks are all down significantly year-to-date, face headwinds going forward, and -- perhaps most importantly -- have a tendency to inspire a somewhat irrational loyalty among the individual investors who own them. As they say in the dating world, maybe it's time to "take a break" from these names:
Yahoo! Inc. (Nasdaq: YHOO): It's still an Internet leader, to be sure. But competition from Google Inc. (NASDAQ:GOOG) is slaying this one-time giant while smaller, more nimble competitors are encroaching on its turf. Meantime, recent management reshuffling signals more turmoil ahead. The stock started the year at $41 and is now at $26 for a 36% year-to-date drop.
Sirius Satellite Radio Inc. (NASDAQ: SIRI) and XM Satellite Radio Holdings Inc. (NASDAQ: XMSR): A word of apology to all the fans of satellite radio out there. I know you love these stocks and are rooting for them to turn around. Maybe they will someday? But as Doug McIntyre wrote recently, it seems the more their businesses mature, the worse the stocks do. Sirius is down 42% this year and XM is off 47%. That's a tax loss you can take to the bank.
Whole Foods Market, Inc. (NASDAQ: WFMI): This is another stock we know you love to love. But don't confuse your obsession with organics with a good investment. Whole Foods was once a great growth stock, but now it's getting punished for disappointing Wall Street's inflated expectations. It is down about 36% year-to-date and it seems there is plenty of room for more disappointment ahead. WFMI still has a price-earnings ratio of 34, which is darn high for a grocery store.
TD Ameritrade Holding Corp. (NASDAQ: AMTD): Can anyone spell F-R-E-E T-R-A-D-I-N-G? That's the main blow that has hammered Ameritrade's stock. It is down 30% this year. Some analysts, including Jim Cramer, think the selling has been overdone and AMTD is a good buy at its current price of $17. But there isn't a rebound in the making yet and competition in the still-crowded discount brokerage may get worse before it gets better.
eBay Inc. (NASDAQ: EBAY): The auction king has had a tough year -- with competition increasing (especially for Skype, its expensive Internet telephony acquisition) and slowing growth. It has even had to deal with a revolt among top sellers on its service as it changed its pricing in an effort to make its core auctions business more attractive to shoppers. The stock, now at $32, has been coming back lately as some analysts (again, including Jim Cramer) find it cheap. But it is still down about 27% year-to-date. Will the holidays be good for eBay? As a one-time eBay shopper, I'm skeptical. There remains a long-term risk to the stock that too little customer service and too much monkey-business by scammers will erode market share in the year to come.
http://www.bloggingstocks.com/2006/1...er-selling-now