This was a wonderful year for investors who decided early on that this was a full risk-on environment and acted accordingly. Most investors are now thinking about various ways to either hedge a potential market reversal in the first quarter of 2025 and at least two of them discussed a year-end trade with me.
Bottom Fishing
One of them likes to look at stocks that performed poorly during the year and are likely to do even worse towards the end of December as they are sold for tax loss harvesting. These companies could rebound sharply in January once the year-end selling pressure abates. The problems that hurt these companies this year – whether internal issues or broader economic challenges – will probably continue into next year. This is not an easy pond to fish in.