Look for bargains
December is almost always a great time to find stocks that have been beaten down beyond what their fundamentals dictate, and it's largely due to tax-loss harvesting. That's happening with a vengeance right now. So keep your eyes open for such stocks, which tend to outperform early in the New Year. How can you spot a bargain? A decent gauge is a company's price-to-earnings ratio, which is its share price divided by it earnings per share. Look at the P/E based on expected earnings for the coming year and actual earnings the past 12 months. You want the ratio in both cases to be below (but not more than three or four points below) the industry average. As a gauge, the market P/E is now about 13. Something less than that is a decent starting point.