Focus on stocks in your portfolio that were long-term losers – long term meaning anything longer than a year, says Karen Finerman.
Although you have to wait 31 days to buy it back (or risk violating your tax treatment), I recommend selling losers. Don’t wait for the stock to get back to cost before you sell. Pair off your gains with your losses, now.
And if you have an aging loser that you really want to hold – you can buy an “out of the money put” which will end your holding period and allow you to sidestep a long-term loss, which is something you really want to avoid, she says.
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Trader disclosure: On Dec. 27, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (DIS), (YHOO), (INTC); Najarian Owns (C), (CSCO), (MS), (MSFT), (BIIB); Najarian Owns (YHOO) Options; Najarian Owns (CSUN) Options; Finerman Owns (GS); Finerman's Firm And Finerman Own (HD), (FLS); Finerman's Firm Owns (PLCE), (SKS), (VLO), (YHOO); Finerman's Firm Is Short (IYR), (IJR), (SPY), (IWM), (SPG), (TCO); Finerman's Firm Owns (MSFT) Options; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns (MDY) Puts And Is Short (MDY); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; NBC Universal Is The Parent Company Of CNBC