Investment Watch

Will your stocks turn into pumpkins by Halloween? They might if they’re already having a bad year. Securities and Exchange Commission accounting rules dictate that stock mutual funds must calculate their annual capital gains and losses for tax purposes by Oct. 31 of each year. That means some portfolio managers will be engaged in “cleanup” trading this month, looking for capital losses to offset capital gains already taken in their funds, to help minimize taxable gains paid to shareholders. The result: Weak stocks may get even weaker as fund managers jettison them to realize losses. Of course, this activity also means that investors who fancy themselves “bottom-fishers” ought to be on the lookout for potential bargains in coming weeks.