Biotech Values

[croumagnon]

The Tax Loss selling puzzle...

Recently, I convinced myself that tax loss selling and the January effect are a reality. So I bought a lot of the 2007 beaten down stocks, such as GTCB and DSCO, and I also bought puts on some of the high flyers for 2007, such as BMRN. My logic was that after the tax loss season is over, starting January, the 2007 beaten down stocks will have a serious upside and the 2007 high flyers will see a pull back on profit taking with gains pushed away for a year.

The above all made sense to me but it is not what is happening in 2008! GTCB and DSCO are still under pressure and BMRN is bucking the market downturn and still on fire!!! I realize that BMRN is a wonderful company and a great investment, and I made money on the upside from about $18 to about $28. However, I was expecting a pull back based on 2008 profit taking and it is not happening. Also, GTCB and DSCO are definitely due for an upside but that is not happening either...

So I have to ask: are tax loss selling and the January effect thing real? Or are they a figment of our imagination that market makers and brokerages use as an excuse to create additional trades for their benefit?