Matt Frankel

Now, this can be used to offset a capital gain from a stock you sold or just to lower your taxable income.

You can use up to $3,000 of losses per year to offset the rest of your taxable income.

But the important thing you got to keep in mind, and honestly, this is the topic we could spend an entire episode of this on, is that it's not a great idea to sell just because you want a tax break if you're still interested in owning the stock otherwise.

No.

I mean, if it's a stock that you're like on the fence about selling and could use the loss for your taxes, then go for it.

But if it's something that you like that just went down, it's not worth selling just to get a tax break.

What are these two about?

Yeah, and these are just rules of thumb, and they work until they don't.

There's another one you didn't mention called sell in May and go away.

The market tends to have a weaker summer than during the busy winter season.

But the Santa Claus rally that you're talking about refers to the historically strong performance of the stock market during the last five days of December and the first two days of January of the trading year.

So since 1950, the stock market has risen 79% of years in this period, and by an average of 1.3%, which is a pretty big move in a seven-day period.

It's often considered to be a bad sign by investors if the market doesn't produce the Santa Claus rally.

And similarly, the January barometer, it's a common belief that if the market

gains in January, it's a good indicator that it's going to gain for the full year.

I mean, some of this is just the market's upside bias over time, but whether the market rises in January or not has accurately predicted a positive or negative full year return 85% of the time since 1950.

It's only gotten it wrong, I think, 11 times.

Well, first of all, as a certified financial planner, I've never suggested clients buy stock a week before the end of the year and sell the first week of January to take advantage of a Santa Claus rally.

I don't do anything like that.

And you're absolutely right.