What the experts say

Harvest time for losses

Around this time of year, investors usually start thinking about “harvesting losses” from taxable accounts to offset gains they’ve made elsewhere in the market, said Bill Bischoff in SmartMoney. Of course, this year most investors don’t have many capital gains to offset. “No matter.” Selling your biggest losers is still a “smart year-end move.” Focus on unloading stocks that you just plain don’t want to keep. This will free up cash to put in “more promising shares”—and the losses you’ve booked can actually be carried over to future years. “Say you sell a bunch of dogs this year, and wind up with a $75,000 capital loss carryover into 2009. You can use that loss carryover to shelter up to $75,000 of gains next year and beyond.” This may be of particular value should capital gains rates go up, as many expect.

Stop looking for bottom

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Conventional wisdom says that a stock market bottom comes when a critical number of investors “capitulate” and sell what’s left of their holdings, said Jason Zweig in The Wall Street Journal. “In theory, if you could spot this moment, you could make a killing buying at the bottom.” In reality, you have a better chance seeing a “unicorn in your backyard.” Bear markets don’t always go out with a flat bottom; instead, they often end in a “cloud of indifference.” Nobody knows exactly when the market will hit its low. But, if you consider the long-term history of price-to-earnings ratios, “stock markets around the world are already on sale.” Instead of looking for an elusive market bottom, look for ways to put your money to work right now. It’s easier—and more lucrative—than chasing unicorns.

Refuge from student debt

Faced with mounting student-loan debt, a few college graduates are fleeing the country, said Jen Haley in CNN.com. Carl, a Florida native, moved overseas after his $55,000 in private school loans went into default. “It was made clear that if I ever came home, I’m screwed,” Carl says. Americans are no strangers to debt, but paying back student loans can be particularly daunting. For one thing, even declaring bankruptcy doesn’t get you off the hook. There are alternatives to “skipping town,” however. You may qualify for a deferment program to suspend or trim your payments, if you aren’t earning enough to pay the loans in the near term. (Finaid.org has information on forbearance programs.) An extended repayment plan stretches out the life of your loan and reduces your payments. The downside is that “you’ll wind up paying more in the long run.”