Dec. 31 is not a particularly magical date for stocks, but it is a very important one for Uncle Sam. That’s the date when you need to tally up all of your investment decisions for the year as you prepare for April 15, tax day. Most investors should make financial decisions well before the end of the year to avoid the pressure that comes with a firm deadline.
Here are three of the most important moves stock market investors need to consider before year-end. And how they all interact with each other in very important ways.
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Pay attention to your big winners
We all love watching as the stocks we own rise. There’s nothing wrong with that, and you should let yourself enjoy the successes you’ve had in your portfolio. But you shouldn’t ignore the impact that investment success can have on your portfolio. If you are like most investors, you’ll have some big winners in the mix. For example, shares of Alphabet(NASDAQ: GOOG) have more than doubled in value over the past year. That’s a huge move in a very short period of time, particularly for such a large and dominant technology company.
If you have owned Alphabet over the past year, it is probably a much larger portion of your portfolio than it was. It could make sense to take some profits to bring the stock’s allocation back down. The problem, of course, is that selling the stock will generate capital gains. Making the sales decision well in advance of year-end will give you time to offset the tax impact of the sale of Alphabet.
If you are like most investors, you also have some investments that didn’t work out as well as hoped. For example, shares of NuScale Power(NYSE: SMR), a start-up working on small modular nuclear reactors, have lost 50% of their value over the past year. You may have purchased the stock when the nuclear power sector was a hot topic on Wall Street. If that trade is leaving a sour taste in your mouth, you can sell the stock at a loss.
That sounds bad, but if you sold some winners, like Alphabet, the loss you take on NuScale could be used to offset those gains. That’s called tax loss harvesting, a tactic that experienced investors use to limit the tax impact of their trading decisions. You can’t repurchase the stock you sell at a loss for 30 days, or you will run afoul of wash sale rules. However, after that span, which isn’t really that long, you can buy the stock back if you want. Or, if you have decided that the trade was a bad choice, you can just move on.
The key is that tax-loss harvesting may give you the push to rethink holding losing positions rather than sitting on them and hoping for the best. Or, worse, just ignoring them so you don’t have to deal with the emotional consequences of admitting you made a mistake. Remember that every investor makes mistakes; it is usually better to recognize them and use them as learning tools.
Shift some money around
If you have trimmed some cash from your winning positions and harvested some tax losses from your losing positions, you now have cash sitting in your brokerage account. That’s not a bad thing, noting that Berkshire Hathaway(NYSE: BRKA)(NYSE: BRKB) ended the first quarter of 2026 with nearly $400 billion in cash. The company is well known for holding cash when management can’t find investments to buy.
That could be exactly how you feel, too, in which case you don’t have to use the cash you generate from trimming your winners and selling your losers. But you do now have the opportunity to either buy new stocks or put more capital into other investments that you own. Clearly, you shouldn’t rebalance your portfolio randomly, but some companies in your portfolio may have strong investment stories. If Wall Street hasn’t recognized the story yet, you may still have time to add to your position now that you have the cash to do so.
As an example, Procter & Gamble(NYSE: PG) is one of the world’s largest consumer staples makers. It is performing relatively well despite a difficult industry backdrop. And, more broadly, consumer staples stocks tend to be very resilient businesses across the full business cycle. The stock is down a bit more than 10% over the past year, even though it is a highly respected business.
You could buy it as a hedge against a recession and/or a bear market, since consumer staples stocks are often viewed as safe-haven investments. Or, if you already own it, you could top up your position by buying while others are fearful. That, by the way, is a core tactic used by Warren Buffett, the former CEO of Berkshire Hathaway.
Portfolios need constant maintenance
Sometimes, doing nothing is the best decision you can make with your portfolio. But other times, you need to buy, sell, and rebalance to keep your investment plans on track. What you shouldn’t do is completely ignore your portfolio. Take a close look at what you own today and decide if you need to do a little portfolio maintenance before Dec. 31 rolls around. And then consider repeating that process monthly or quarterly to keep your portfolio from growing unruly.
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Reuben Gregg Brewer has positions in Procter & Gamble. The Motley Fool has positions in and recommends Alphabet and Berkshire Hathaway. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.
