Replies to post #52988 on DNAprint Genomics (DNAG)

[pennyking63]

Tax-Loss Selling
December 14th, 2006


The new year is coming. That means tax-loss selling.

Before each year-end, many investors engage in tax loss selling. Simply put, if you made money on some stocks you have to pay tax on the capital gains.** However, if you lost money on others, you can use that to offset the amount of tax owing.**

The trick is that, to be counted as a gain or a loss, the stocks need to be sold. If you were to wait until after new years, that capital gain or loss would count towards 2007.

Why is this significant? Because each December you will see a lot of this tax loss selling against some penny stocks that have been falling already. Shares of a penny stock that fell 50% in the first 11 months of 2006 may suddenly drop another 20% in December.

Don't get too spooked by the tax loss selling effect. In a lot of cases, the penny stocks that got hit in December will spring back to life as soon as the New Year's hangovers clear up.

** Tax laws are different depending where you live. Tax loss selling may not apply for you. Talk to your accountant

[Sandoz]

Thank you!
Very concise and intelligent response. I appreciate your help to a noob investor.