About this time every year you probably hear the words "tax selling."

What is tax selling?

Tax selling occurs toward the end of each year when investors sell stocks in which they have losses in order to offset their investment gains.

In other words, investors, in order to reduce their tax bite, sell their losers to help pay for their winners.

As you can imagine, the types of stocks that get hit hardest by tax loss selling are those that have done the worst throughout the year.

The irony of tax loss selling is that it punishes stocks that have already been punished throughout the year.

Is tax selling a good idea? Since situations differ, tax selling may or may not make sense. I can tell you that, as a general rule, making buy and sell decisions based solely on tax reasons often is a losing proposition.

How can you capitalize on tax selling? If a favorite stock gets worked over at the end of the year because of tax selling, the price decline may be providing an opportunity to buy a good long-term stock at an artificially depressed price.

For 2000, expect severe tax selling in many of the high-flying technology and Internet stocks that have plummeted back to earth over the last 10 months.