I would not call the volatility of the last few days a roller coaster ride but more like the Tea Cups ride.It's whirling around without necessarily big highs and lows but the action might nauseate you anyway.
For a short while this morning the S&P 500 was back in the red for the year. On RealMoney I wondered if the market might rally into quarter end and then sell of next week. Well so far so wrong.
I'm not sure how much I believe in window dressing but to the extent it does create a little more octane in the market, you, managing your own portfolio, certainly do not have to get caught up in whatever plays out. FWIW I don't either and actually I can't envision a reasonable scenario where someone managing accounts for individuals would need to try to window dress a portfolio.
2 comments:
Window dressing, as I was taught in MBA finance classes is not about advisors window dressing client accounts.
It's about Mutual Fund managers realigning their funds with their stated fund objectives. Since they only report fund holdings on a quarterly basis, many of them have style drift issues during the quarter (I assume chasing alpha). This window dressing as I have always understood it is those managers attempt to get their funds back to something resembling their stated goals prior to having to report their holdings.
Individual portfolio managers like yourself have no need for this since your clients can probably access their holdings anytime they want to see where they are. They also likely receive reports with all your transactions.
Another opinion from Investopedia:
"Performance reports and a list of the holdings in a mutual fund are usually sent to clients every quarter. To window dress, the fund manager will sell stocks with large losses and purchase high flying stocks near the end of the quarter. These securities are then reported as part of the fund's holdings.
Another variation of window dressing is investing in stocks that don't meet the style of the mutual fund. For example, a precious metals fund might invest in stocks that are in a hot sector at the time, disguising the fund's holdings, so clients really have no idea what they are paying for.
Window dressing may make a fund appear more attractive, but you can't hide poor performance for long."
Did I hear it right yesterday on cnbc, an asset mgr touting preferred stock from new century, adamant that the company is doing fine? Today, headed for bankruptcy? If all that is accurate, shame on cnbc for just giving open mike and no questions. Which reminds me, cramer has got nine lives.
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