A strong run in Canadian equities has set the stage for another active year-end tax-loss season as investors prepare to balance portfolios and lock in gains. Analysts say this year’s selling could be more pronounced given the broad market rally.
BNN Bloomberg spoke with Sid Mokhtari, chief market technician at CIBC Capital Markets, about seasonal trading patterns, the typical timing of selling and why some well-known names could come under short-term pressure.
Key Takeaways
- CIBC’s early screening identifies 32 TSX stocks potentially exposed to tax-loss selling pressure in 2025.
- The TSX’s broad-based strength this year increases the likelihood of investors harvesting losses to offset capital gains.
- Only two large-cap names, CGI Inc. and Constellation Software, appear among the initial loss candidates.
- Roughly 4.1 per cent of the TSX by market weight could face year-end selling if prices fail to recover.
- Tax-loss activity typically peaks from mid-November to mid-December, with trades required before the final 2025 settlement date of Dec. 30.
Read the full transcript below:
ANDREW: We’re not far from November and the usual round of tax-loss selling. Often, we see shares that have already fallen drop even more as investors sell to lock in losses and offset gains elsewhere. Let’s get some thoughts from Sid Mokhtari, chief market technician at CIBC Capital Markets. Sid, thanks very much for joining us. We’re certainly getting an early start on this one, but it’s fascinating — you’ve highlighted several stocks that are down, and of course, it’s been a good year. So people may have plenty of capital gains they want to offset.
SID: Precisely. Thanks very much for having me. I agree it’s been a very robust year for the TSX index. As you mentioned, market breadth has been very strong, with gains across many sectors. So 2025 has produced a strong backdrop of capital gains, which makes this harvesting strategy — tax-loss selling — a viable narrative, in our view. We’ve tested this approach in the past, and it’s worked quite well.
ANDREW: I suppose one idea here is that if you like a stock for the long term, you might wait for it to be sold off during tax-loss season, then pick it up at a cheaper price.
SID: That’s very true. We also use a formulaic approach, which allows us to test and confirm validity historically. We’ve found that, at minimum, a stock needs to be down about 20 per cent from its 52-week high and negative for the year. We also screen for names that are down on the quarter and rank poorly in our matrix process. When those conditions are met, you typically get negative momentum and trend — the kind of weakness we often see from mid-October through mid-December. Tax-loss pressure usually peaks by mid-November into December, which can create buying opportunities for bargain hunters.
ANDREW: When do we tend to see the peak of tax-loss selling?
SID: Anecdotally, the bulk of selling pressure happens from mid-November through mid-December. That’s generally referred to as the tax-loss selling period. The repurchasing window tends to start around mid-December and extends into January.
ANDREW: Let’s look at some individual names. Your first group includes TFI International, Ag Growth, Cargojet and Descartes Systems, among others. They’re all down this year.
SID: Yes, that’s right. We try to remain agnostic in terms of what drives the weakness — whether it’s fundamental, technical or quantitative. What matters is whether a stock qualifies as a tax-loss candidate. Those names fit that profile: they’re down about 20 per cent from their peaks, have negative momentum and are weak on relative strength. Historically, these stocks have served well as part of a harvesting strategy, with investors often revisiting them later during the repurchase window.
ANDREW: And another group you’ve noted includes several software and resource names — Lightspeed, Constellation Software, West Fraser Timber and CGI. Constellation and CGI are interesting because they’ve long been seen as blue-chip compounders.
SID: Exactly. We still view both as strong long-term names, and many clients agree. They’re well-owned by institutional and retail investors alike. Because it’s been such a strong year, those positions could be used as part of a tax-loss strategy. In our view, these stocks are prime candidates right now, and we’d be inclined to review them again once we enter the repurchase period, when they could become quite attractive.
ANDREW: Over the holiday period, trading can get pretty thin. Sometimes, that’s a good time to place a low bid for a quality name and maybe get it cheap.
SID: That’s historically been a solid strategy. This year, we’ve identified 32 TSX members that qualify as potential tax-loss candidates. By comparison, we typically see about 50 to 70 in a given year. So the number is relatively limited. Given how many managers are sitting on gains, it would be reasonable to assume some of these larger-cap compounders could come under temporary pressure — but they might offer opportunity heading into the repurchasing window.
ANDREW: Sid, fascinating stuff. Thank you very much. That’s Sid Mokhtari, chief market technician at CIBC Capital Markets.
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This BNN Bloomberg summary and transcript of the Oct. 8, 2025 interview with Sid Mokhtari are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
