It will be interesting to see if we see a tax loss sell-off this year. Last year we hit multi-year lows in early June followed by a steady recovery and a sharp spike when the Zim raise was announced. I'm looking to buy some shares when my big dividend arrives in the middle of June but am not sure if we will see a sell off like last year. Below are my thoughts:
- We are again at multi-year lows so likely a lot of share holders have substantial losses that they might want to realize for the tax year.
- Many of the shareholders who would take advantage of tax loss selling may have already done so last year, decreasing the chance that we see a similar sell off this year.
- Most shareholders likely expect substantial positive news at any moment, decreasing the chance that they will be willing to decrease their holdings to realize the tax loss.
- I remember some HC users mentioning tax loss harvesting last year whereas I don't recall seeing any discussion of it this year.
Below is a screenshot showing the time frame from 2024-03-01 to 2024-08-31. As you can see, there is a substantial sell-off from mid-May to mid-June followed by a steady recovery. There's a sharp spike when the Zim raise is announced. It's impossible to know how much of this sell-off was tax loss harvesting related vs shareholders selling for other reasons. However, given the steady recovery from early June to just before the Zim raise, my guess is that a fair amount of the recovery was tax loss sellers buying back in. Could be unrelated though.
Anyone have any thoughts on whether we'll see a similar sell-off this year? I'm hoping to pick some up in the 4.8c to 5.0c range AUD but not the end of the world if it doesn't hit that as there's other cheap stocks I wouldn't mind buying.
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