This week holiday shoppers have turned into post-holiday exchangers. While Main Street shops for sweaters in the proper size, Wall Street has a few items to cross off of its “to do” list before New Year’s eve, too. Let’s go over some of the items that will help shape the week that lies ahead.
1. Watch out below, Uncle Sam: It’s the final trading week for what has been a very volatile year. The exchanges appear to be headed toward modest losses for 2011, but odds are that there are more than a few real stinkers in your portfolio.
Tax-loss selling, anyone?
If you’re not familiar with the practice, it’s a way for investors to offset realized capital gains by unloading investments that they will be selling at a loss. If you have enough turkeys in your portfolio to offset your gains, you’re unfortunately fortunate. You can even go a bit over on the losses, though only up to a maximum of $3,000 net loss that can be deducted from ordinary income. The balance just carries over to the following year.
It’s important to know about tax-loss selling for two important reasons. The first, of course, is that it’s one way to effectively manage your tax bill come April. However, even if you have no intention of participating, recognize that some of your biggest losers in 2011 may continue to slide until the tax-loss selling by others subsides.
2. The yolk’s on you: With so many companies and traders away on holiday this week, it shouldn’t come as a surprise to find that it will be eerily quiet on the earnings stage.
Cal-Maine (CALM) is one of the few companies reporting earnings. The country’s largest shell egg producer is expected to bounce back after a sloppy quarter last time out. Analysts are expecting net income of $0.89 a share in Tuesday’s report, 41% ahead of the $0.63 a share that Cal-Maine posted during the same quarter last year.
3. Give eBay a chance: Until a few years ago, eBay (EBAY) had a neat way to keep registered users close after the holiday shopping craze subsided. A day or two after Christmas, eBay would offer up a day of free listings for stateside sellers.
This doesn’t mean that eBay was leaving money on the table. The leading auction marketplace simply didn’t charge the insertion fee that it typically charges when someone wants to sell something. eBay would still collect its piece of the action on any successful transactions.
There really hasn’t been much of a reason for eBay to revisit the unofficial holiday in recent years. Its new pricing policy for casual sellers allows for a few listing-fee-free submissions every month. However, it’s also handy to think of eBay this time of year if you have a few extra gifts you didn’t want or need to raise some money to pay the bills for the shopping that you did yourself.
Given the natural uptick in activity after the holidays on the site, this may finally be the time you score that rare Alf lunchbox that you always wanted.
4. See you at the movies: If exhibitors are going to save the year, it will have to happen this week.
Box office receipts continue to check in lower than where multiplex operators were at this point last year. Despite theater owners embracing premium RealD (RLD) 3-D makeovers and super-sized IMAX (IMAX) screens, a night at the movies just isn’t as popular as it used to be.
Cynics will simply blame the product, but there were plenty of critically acclaimed movies lighting up the big screen this year.
Some of the big movies opening in recent days include The Darkest Hour and Steven Spielberg’s War Horse.
Let’s be frank: It won’t be enough. History will look back at 2011 as a challenging year for movie studios that managed to grow their ticket sales during the darker recessionary years before that. Maybe going out to the movies has gone stale. Maybe the Internet is entertaining enough. Movie studios won’t believe it, but then again they’re the ones that invented the Hollywood ending.
5. Stupid portfolio manager tricks: It’s not just investors making portfolio moves to close out the year. Some mutual fund and hedge fund managers like to dabble in the perfectly legal practice known as window dressing.
In order to make sure that their year-end list of portfolio holdings look good, managers will be tempted to dump stinkers and load up on 2011’s biggest winners.
You’re too smart to fall for that trick. Always compare fund managers against the annual returns of funds with similar objectives.
Leave the dressing for your salad.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Cal-Maine Foods. Motley Fool newsletter services have recommended buying shares of IMAX and eBay. Motley Fool newsletter services have recommended writing puts in eBay.