Now Is A Good Time to Consider Year-End Tax Moves



With about five weeks left to go in 2015, now is a good time to give your tax situation a review. You will have enough time to take any desired action if you analyze your taxes now. You’ll also have the ability to start planning for 2016.

A good place to start is to look at your capital gains and losses both realized and unrealized. You can offset realized gains by selling investments that have declined in price since purchase. While we do not recommend letting the tax tail wag the portfolio dog, investing is messy and allowing for some flexibility to take advantage of opportunities that fit within your long-term strategy can help you achieve better long-term returns. Plus, if the investment otherwise violates your sell rules, the ability to reduce your tax bill can be the incentive to follow your portfolio rules. If the investment has long-term appeal but has fallen in price enough to make it worthwhile to realize the loss, wait at least 30 days to repurchase it to avoid incurring the wash-sale rule. Be careful of the dividend dates since you must hold a stock for 61 consecutive days surrounding the ex-dividend date. The ex-dividend date is commonly two trading days prior to the date of record for being eligible to receive the dividend.

Don’t forget to check your mutual fund for any distribution declarations. Mark Wilson at told me that this year is running about average in terms of mutual fund distributions. He estimates about 325 mutual funds will make distributions of at least 10% of their net asset value (NAV) this year, down from more than 500 last year. Wilson is seeing more funds distributing in excess of 30% this year, however. Keep in mind that both exchange-traded funds and closed-end funds can also make taxable distributions, so follow up with any of these types of funds you hold as well.

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AAII Model Portfolio Update

There are no changes to the Model Shadow Stock Portfolio this month. The portfolio underwent its quarterly review at the beginning of September and no stocks met the sell criteria. Because this is an actual and fully invested portfolio, no new stocks are added without the removal of a current holding.

There were also no changes to the Model Fund Portfolio this month. The Model Fund Portfolio was discussed in the November 2015 AAII Journal.

The Model Fund Portfolio was up 6.9% in October, while the Model Shadow Stock Portfolio, which invests in micro-cap value stocks, was up 1.7%.

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AAII Sentiment Survey

Pessimism jumped to a seven-week high, but the rise only put it slightly above its long-term historical average. More about this week’s results.

This week’s results:
  • Bullish: 30.8%, down 3.5 points
  • Neutral: 38.7%, down 4.0 points
  • Bearish: 30.5%, up 7.5 points
Historical averages:
  • Bullish: 39%
  • Neutral: 31%
  • Bearish: 30%

Take the Sentiment Survey.

The Week Ahead

The U.S. financial markets will be closed on Thursday in observance of Thanksgiving. The U.S. stock exchanges will close early on Friday at 1 p.m. ET. Our offices will be closed on both Thursday and Friday.

Just under 15 members of the S&P 500 will report, many of them retailers. There will be also be an underlying food theme with Tyson Foods (TSN) reporting on Monday; Campbell Soup Company (CPB) and Hormel Foods Corp. (HRL) reporting on Tuesday; and Deere & Company (DE) reporting on Wednesday.

The economic calendar will be jammed into three days. The November PMI manufacturing flash and October existing home sales will be released on Monday. Tuesday will feature the first revision to third-quarter GDP, the September Case-Shiller Home Price index, and the Conference Board’s November Consumer Confidence survey. October durable goods orders, October personal income and spending, weekly initial jobless claims, October new home sales, the University of Michigan’s final November consumer sentiment survey and weekly oil inventories will be released on Wednesday.

The Treasury Department will auction $26 billion of two-year notes on Monday. On Wednesday, it will auction $13 billion of two-year floating rate notes, $35 billion of five-year notes and $29 billion of seven-year notes.

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