The secret to holiday market investing and trading

Good morning!

Futures are down a bit as I write on the heels of a 5th straight gain for the Dow. Volumes are beginning to lighten up as traders exit for the New Year Holiday.

Here’s my playbook.

1 – Chance favours the prepared

Holiday-related trading is different than normal market conditions, so it makes sense to adapt.

Volume dries up and spreads – the difference between bid and ask - get super wide, meaning they are far apart. The reason you should care is that volatility increases which means you can buy and sell more effectively if you know how.

It doesn’t matter whether you’re an investor or a trader.

I suggest entering a handful of outrageously high sell orders and equally preposterous lowballs ahead of time “GTC” – meaning good till cancelled. Think Apple at $200 or Tesla at $400, for instance.

That way you can take profits if things run sharply higher or do some buying if they drop sharply lower. Then, step away and enjoy the New Year.

No heat of the moment decision making required!

2 – 3 last-minute tax moves

Tax-loss harvesting is the biggest. That’s a practice of offsetting capital gains with losses. Investors who have more losers than winners can even deduct up to $3,000 against their regular income. Be careful of the so-called “wash rule” which could prevent you from deducting a loss if you repurchase “substantially identical” investments within 30 days.

Make a few well-placed charity donations. Using the most profitable assets held for over a year – including stocks and crypto – could give you the biggest tax break. You can even “bunch” donations to combine multiple years of donations as a way to clear standard deduction thresholds.

Pay medical expenses if you’re itemizing. 2021 rules allow filers to claim deductions for doctor’s visits, prescription drugs, medical expenses and more if expenditures on those things are more than 7.5% of adjusted gross income.

Check with your accountant to be sure but do it quickly.

The deadline is December 31st.

3 – No open sesame for Alibaba

Shares are down in early going on news that the company may sell 30% of its stake in Weibo to the state-owned Shanghai Media Group. It’s yet another move intended to rein in once-vibrant entrepreneurs that challenged Beijing’s leadership. (Read)

Not touching shares myself, even at these levels.

4 – BioNTech shares go off a cliff; buy this instead

BioNTech is on track for a 7-day losing streak as shares fall. People are wondering if Omicron is “proving” that the virus isn’t the threat it once was and traders are simply taking their foot off the gas as a result.

The better choice was and remains Pfizer because it’s “Virus+”. Not only are shares more stable because of the broader portfolio, but the company is on the verge of truly customized medicine. And, not for nothing, the world is buying Pfizer’s Covid-19 pill. (Read)

5 – The biggest party ever?

Apparently, socialite Paris Hilton gets $1 million a gig as a DJ for the jet set in places like Dubai, China and Ibiza, which is jaw-dropping to me and a story for another time.

What catches my attention is that she’s moved early and decisively into the Roblox Metaverse where she’s apparently set up a digital island complete with her Beverly Hills home, yachts, and cars. You can even buy virtual clothing if you fancy a bit of shopping.

I think other celebrities will follow but whether they stay there or not will tell us a lot. (Read)