Tax-loss sell-off in battered U.S. stocks could spur January rally

However, some investors are betting that some of the beaten-down stocks may see the broader market rebound in January once the sell-off period is over. ” This is the first time investors have focused on a double-digit drop of about years, we have never seen this level of tax loss before sales,” said Peter Essele, who is responsible for approximately $ 100 million assets as the investment of the person in charge of the federal financial network portfolio management. “That could lead to a pretty strong first few months as people start to reinvest in long-term assets.”

Standard & Poor’s 25 Declining stocks % or more – making them possible target tax loss sell-offs – in years where the index falls by more than Among them, from November to the end of January, historically outperformed the market index by 8.2 percentage points %, analysts at Bank of America Global Research at stated in a research report.