It’s that time of year again for the annual tax loss harvest. It’s happening now across brokerages, and it’s growing. Advisers have been locking in losses to offset large realized gains since the start of the year, particularly going back to April when clients cut wins and booked profits. We know that most of the sell orders for stocks that have lost money year-to-date are coming in as market orders from our trading partners across the region, which we interpret as simply sellers with tax losses trying to get out of the picture, even if only for 31 days as directed by the IRS. These strong flows are likely to continue from now until the end of the year. Portfolio placements have changed, stocks have been rotated to align with the 31-day wash sale rule, and there is a large amount of tax selling. Some good companies are forced out simply because they’re in the red, but that’s not necessarily because something is fundamentally broken. Let me be clear: I don’t like buying losers. A 52-week low is not a buy signal. There’s a reason why most stocks hit new lows. However, with a number of technical and tax distortions, there may be some opportunities this year. We had a strong start to 2025 with a small leadership group led by the “Magnificent Seven,” but now we see a potential trash-digging opportunity, a temporary disruption of quality names. Think about what’s on your radar right now. 2025’s “Dogs of the Dow,” or highest-yielding blue-chip stocks, include names like Verizon, Chevron, Amgen, Johnson & Johnson, Coca-Cola, and IBM (we own most of these companies). These are not speculative trades. These are global franchises with yields ranging from 3% to nearly 7%. VZ CVX YTD Mountain VZ and CVX Year to date And if you look beyond the “Dogs” and look at some of the tickers on the bottom 52-week list, you might find some decent companies that may have been quiet this year. Procter & Gamble is actually a dog of the Dow and is also the name of New Law. Adobe, ADP, Kimberly-Clark, Kraft Heinz, and Charter Communications are all hitting new lows. Historically, these have not been super high-risk tickers. These are established companies. This exercise is not about picking up trash, but about getting rid of temporary weakness for unfairly marketed quality. If you can find a stock with a strong balance sheet, strong free cash flow, and dividends that will pay you over time, it may be worth considering while other companies are selling the stock for tax reasons. And then I remember one of the names that I’m actually looking to buy from, IBM. 2025 IBM YTD Bar I think IBM is currently a dog of the Dow yielding just over 2% and is quietly turning into one of the most interesting opportunities in the large-cap tech space. The market still treats IBM like an old-school mainframe company, which is outdated. Nearly half of our revenue now comes from software, hybrid cloud, and AI services. Last quarter, software revenue rose nearly 9%, with free cash flow of about $13.5 billion. At around 25x forward price/earnings, you can pick up a high-yield, cash-rich, AI-powered company name at a discount, which is not the case for most mega-cap tech companies right now. As z17 mainframe updates continue to improve and Red Hat continues to deliver, enterprise AI adoption is just beginning. In fact, the year-end slump looks like an opportunity. This year’s “harvest” doesn’t mean chasing broken stories. That means recognizing that forced divestitures for tax purposes create inefficiencies, and with discipline, you may be able to pick up blue-chip companies like IBM at lower valuations. For long-term investors, I think this is the kind of setup that could quietly deteriorate while the market is busy looking at shiny objects. Kevin Simpson is the founder and CEO of Capital Wealth Planning and the manager of the Amplify CWP Enhanced Dividend Income ETF (DIVO).
