Although the concept of dumping shares often arouses intense emotions, when it comes to the topic of stocks to sell for tax-loss harvesting in 2022, it’s an unavoidable discussion. To get everyone on the same page, tax-loss harvesting refers to selling losing investments to offset capital gains involved in selling some winners. That way, you can leverage your losses productively.
To be clear, every situation is different as the CFA Institute points out. Therefore, if you have specific questions about what to do with your portfolio, please consult a tax professional. Do not contact me because I am not a tax professional nor do I provide tax or financial advice.
Rather, the point of this article is that market losses don’t have to mean the end of the world. Instead, you can make the most out of a bad situation through certain tactics. With that in mind, below are stocks to sell for tax-loss harvesting in 2022.
| OPEN | Opendoor | $1.45 |
| RDFN | Redfin | $5.12 |
| SOFI | SoFi Technologies | $4.45 |
| BBBY | Bed Bath & Beyond | $3.13 |
| CVNA | Carvana | $4.95 |
| ZM | Zoom Video | $73.69 |
| HIVE | Hive Blockchain | $1.90 |
Opendoor (OPEN)
While I don’t necessarily want to beat the expired horse that is Opendoor (NASDAQ:OPEN), we must face realities: the underlying iBuyer business model – which utilizes advanced technologies to make offers on homes for flipping purposes – faded badly. Arguably, it’s just not sustainable.
In Oct., Wired.com warned that Opendoor may represent a canary in the economic coal mine. Fundamentally, with the Federal Reserve committed to attacking escalating inflation through raising the benchmark interest rate, deflationary forces will materialize. In other words, the central bank’s tightening policy will strain liquidity, thereby raising borrowing costs. Thus, prices will likely fall over time.
True, the November jobs report came in much hotter than expected, suggesting more dollars will chase after fewer goods. At the same time, this will probably only inspire the Fed to get even more aggressive with rate hikes. Again, that’s not great for rising home prices. Therefore, OPEN may be one of the stocks to sell for tax-loss harvesting.
Redfin (RDFN)
While operating a traditional real-estate brokerage business with some technology thrown in, Redfin (NASDAQ:RDFN) remains questionable. We just need to look at its market performance to recognize harsh realities. On a year-to-date basis, RDFN hemorrhaged nearly 88% of equity value. Even in the near term, circumstances don’t look great. For instance, in the trailing five sessions, RDFN shed over 15%.
Fundamentally, the circumstances don’t look pleasant. While the labor market runs hot now, higher interest rates could mean serious problems down the line. Indeed, we’re already witnessing major tech firms announce layoffs. Many of the impacted involve high-paying white-collar jobs. Therefore, economic pressures may force more homes to enter the market, which would be deflationary for the sector.
Further, 90% of companies may require employees to return to the office beginning in 2023. Therefore, the gentrification that sprouted in the new normal – whereby workers from wealthier regions displaced people from more rural areas – might end. If so, RDFN could make for a solid case among stocks to sell for tax-loss harvesting.
SoFi Technologies (SOFI)
Cynically, SoFi Technologies (NASDAQ:SOFI) makes for an intriguing case among stocks to sell for tax-loss harvesting in 2022. That’s because so many people bid up SOFI based on memes and other talking points distributed across public platforms. Unfortunately, the buy-the-dip approach utterly failed for SOFI stock. Since the start of this year, shares plunged over 72% of market value.
Now, that’s not to say that shares can’t bounce back before the year is over. Still, the circumstances don’t look great. In the trailing month, SOFI dipped nearly 19%. In the trailing five sessions, shares lost nearly 8% of equity value. Put another way, stakeholders face practical choices. Do they hold onto this losing investment in the hopes that it soon swings higher? Or do they sell and offset their capital gains?
Fundamentally, one of the warning signs associated with SOFI stock centers on its loan origination allocation. Currently, SoFi lends out money for personal reasons the most. This segment isn’t necessarily economically accretive like home or even student loans. However, SOFI might make sense as one of the stocks to sell for tax-loss harvesting.
Bed Bath & Beyond (BBBY)
Another name that I don’t mean to harp on, nevertheless, Bed Bath & Beyond (NASDAQ:BBBY) ranks among the relatively easy ideas for stocks to sell for tax-loss harvesting. A chain of retail stores that specializes in various home goods, BBBY might have made sense during the housing boom. Back then, consumers had reason to acquire home goods – to beautify their newly acquired acquisitions.
Now? Not so much. With skyrocketing inflation effectively removing many households from the middle class, consumer sentiment ranks poorly. Also, the personal saving rate declined sharply since April 2020. Concurrently, credit card loans soared to record heights. Combined, this circumstance suggests that fewer discretionary funds remain available for consumers. Obviously, that’s not great news for BBBY stock.
However, shares did represent a meme at one point, implying many stakeholders still exist. For such folks, they might want to take the 5,000 IQ approach and consider BBBY as one of the stocks to sell for tax-loss harvesting. Again, it’s all about making the most of a bad situation.
Carvana (CVNA)
While I still believe in the auto dealership industry despite huge macroeconomic pressures, Carvana (NYSE:CVNA) is an entirely different matter. For one thing, with CVNA shares plunging nearly 98% of equity value, investors need to be realistic. Sure, a possibility exists that it can pop back up. However, it’s probably a better plan to consider CVNA as one of the stocks to sell for tax-loss harvesting.
Here’s the deal. On the plus side, the average age of vehicles on U.S. roadways hit a record 12.2 years, per the Wall Street Journal. With the complexities of modern vehicles, you don’t want to keep repairing what will end up being a money pit. On the other hand, because we presently endure economic pain, folks need to get their rides as cheap as possible.
Fundamentally, that’s not going to happen with Carvana. Further, people no longer fear the pandemic as they once did. Thus, a key driver of CVNA’s upside diminished significantly. With that in mind, stakeholders may want to target CVNA as one of the stocks to sell for tax-loss harvesting.
Zoom Video (ZM)
Back when the coronavirus pandemic struck, Zoom Video (NASDAQ:ZM) effectively represented critical infrastructure. With contactless operations rapidly becoming a priority, Zoom enable myriad organizations to send their employees home. Therefore, Zoom was one of the very few companies that really didn’t encounter a first-quarter 2020 hiccup. However, with circumstances changing sharply, it’s time to consider ZM as one of the stocks to sell for tax-loss harvesting.
Technically speaking, ZM stock is a mess. Since the start of the year, shares dropped nearly 61% of equity value. Unfortunately, unlike other securities, Zoom did not receive a near-term bump. Over the past week, ZM dipped 1%. In the trailing month, it gave up a worrying 18%.
Fundamentally, Zoom just lacks relevance. Again, with a vast majority of companies likely to recall their workers, teleconferencing will lack its prior punch. Even when considering that enterprises will cut down on business travel, Zoom must also content with competitors. For one thing, I’d be worried about tech do-it-all Microsoft (NASDAQ:MSFT) muscling its way in.
Hive Blockchain (HIVE)
As much as I supported the cryptocurrency sector (and still do) I have to be realistic. And I urge other investors to read the writing on the wall. Cryptocurrencies may be due for a long winter, particularly as monetary policy may tighten significantly to combat inflation. And because blockchain and crypto-mining enterprises like Hive Blockchain (NASDAQ:HIVE) depend heavily on virtual currency sentiment, it’s a name to avoid.
Now, if you already own HIVE, you may want to consider a mitigation approach. Use shares as one of the stocks to sell for tax-loss harvesting.Before I get inundated with hate mail, hear me out. Just based on historical dynamics, we know that cryptos tend to incur extreme boom-bust cycles. Following a bust, cryptos require some time for the sector to regain its footing.
However, this bearish lull may require even more time than normal because of severe infrastructural concerns. And these concerns might lead to heavy regulation of the space, which might negatively impact upside potential. Therefore, it’s time to do something useful with HIVE by making it one of the stocks to sell for tax-loss harvesting.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.