Strategies to maximize stock returns before the year-end

With 2021 coming to an end, it’s time for investors to look at tax-harvesting — and the stocks that could benefit from this…

What is tax-loss harvesting? Selling losers to reduce taxes — from gains realized on other investments. While this can happen any time of the year, it’s often implemented near year-end.

This strategy is only available for taxable accounts — excludes IRA, Roth IRAs or 401(k)s. But for those with no plans to sell, there’s a strategy to benefit…

Bottom feeding: According to a note by Bank of America strategists (via Barron’s):

• Stocks down by over 10% between Jan. 1 and Oct. 31 beat the market by an average 1.6 percentage points — in the following three months.
• The next two months are chances to buy companies sold off from tax-harvesting.

Tax-harvesting picks up in October — running well into December — making these few months bargain-hunting times.

Where to look? Barron’s also offers up a few companies as starting points:

• Activision (NASDAQ:ATVI) — the gaming company down 26% this year from workplace issues — has a robust pipeline of games coming in the next 2 years.
• Fiserv (NASDAQ:FISV) — the payments company down 9% this year from debt problems — is considered attractive valuation-wise by analysts.

The Joe’s take: One area we’ve covered heavily this year are Chinese stocks — which are still majorly down from Chinese government regulations. Some of the largest internet giants, Alibaba (NYSE:BABA), is down 26% and Pinduoduo (NASDAQ:PDD) is down 44% this year.

With US stock valuations at record highs and Morgan Stanley strategists seeing a tough year for the US stock market in 2022, global stocks could be where to look.

Must-read: The bull and bear case for investing in Chinese stocks.