Window Dressing – You may be naked in front of that window
I have heard so much about “quarter end” window dressing, and have to admit I never understood the theory. It sounds like managers who weren’t fully invested in a good quarter are supposed to buy stocks so they can show they were fully invested?
Which would you rather send to your clients:
Dear investor, we are now fully invested but underperformed the market, so either we piled in at the last minute or our investments all sucked.
Or
Dear investor, we were up, but not as much as the market. We remained cautious and continue to do so, here are the reasons why….
Anyways, here are the last 7 quarters. It includes some big positive quarters. In the 3 prior quarters that had greater than 10% gains, the index did nothing or actually sold off a little in the last 5 days.
|
Quarter |
S&P |
Qtr Rtn |
Last 5 Days |
|
12-Mar |
1406 |
12% |
? |
|
11-Dec |
1258 |
11% |
-1% |
|
11-Sep |
1131 |
-14% |
-3% |
|
11-Jun |
1321 |
0% |
4% |
|
11-Mar |
1326 |
5% |
1% |
|
10-Dec |
1258 |
10% |
0% |
|
10-Sep |
1141 |
11% |
-1% |
So I’m not sure where the quarter end window dressing argument comes from, but it doesn’t seem to based on facts.