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Tax Strategy and Stocks: Play the 'January Effect' NOW?

Tuesday, 7 Dec 2010 | 1:07 PM ET

Dean Foods, Apollo Group and H&R Block are among the biggest losers on the S&P 500 this year. What are the chances they will become the winners in 2011? Nicholas Colas, chief market strategist at ConvergEx, shared his insights.

Buying the Losers
A look at the big profits from the big losers, with Nicholas Colas, The ConvergEx Group.

“There’s a phenomenon called the ‘January Effect’ that kicks in this time of the year,” Colas told CNBC.

“December is the new January. And what happens is, folks who start to sell these stocks to take tax losses to offset some capital gains they might have in their portfolio create a near-term buying opportunity in these losers.”

As a result, investors can temporarily "overweight" and hold names that have lagged the overall markets, said Colas.

Colas' Caveat:

However, Colas warned that the list of laggards are poised to rise strictly based off the "January Effect."

“Stocks that are on this list are there for a reason and often, it’s fundamentals,” he cautioned.

S&P 500 Bottom 5:

Dean Foods

Apollo Group

H&R Block

AK Steel

PulteGroup

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Scorecard—What He Said:

  • Colas' Previous Appearance on CNBC (Dec. 3, 2010)

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More Market Analysis:

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CNBC Data Pages:

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CNBC Slideshows:

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Disclosures:

No immediate information was available for Colas or his firm.

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Disclaimer

  Price   Change %Change
AKS
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APOL
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DF
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HRB
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PHM
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