Comments on: Window Dressing? http://www.tasgall.com/2006/09/26/window-dressing/ Peering into the Cauldron of the Gods... Wed, 28 Sep 2011 10:20:57 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Quicksilver http://www.tasgall.com/2006/09/26/window-dressing/comment-page-1/#comment-213 Quicksilver Wed, 27 Sep 2006 13:43:55 +0000 http://www.tasgall.com/2006/09/26/window-dressing/#comment-213 I recently read an article at Contrahour about how Fidelity was the number one or number two holder of just about every large and mid cap energy stock before the recent drop in the energy sector. Some believe that what is fueling the market recently is a massive sector rotation at Fidelity. They are selling off the profits from energy and buying more defensive stocks. What might happen when this wears out? It's not necessarily window dressing per se, but it does point to the potential power of large mutual funds in the markets. I recently read an article at Contrahour about how Fidelity was the number one or number two holder of just about every large and mid cap energy stock before the recent drop in the energy sector. Some believe that what is fueling the market recently is a massive sector rotation at Fidelity. They are selling off the profits from energy and buying more defensive stocks. What might happen when this wears out? It’s not necessarily window dressing per se, but it does point to the potential power of large mutual funds in the markets.

]]> By: John http://www.tasgall.com/2006/09/26/window-dressing/comment-page-1/#comment-212 John Wed, 27 Sep 2006 12:07:44 +0000 http://www.tasgall.com/2006/09/26/window-dressing/#comment-212 After a little though, here's two opinions on stocks "that would benefit from quarter-end window dressing": --Any stock that's performed in the top 10% of the market that's within the mutual fund's cap or Value/Growth range. Since Mutual Funds don't disclose when they purchased a particular security, it looks good on their publications and listing of "top 15 holdings" to show that they were on the right track. I would expect that this would have a positive, but short-term, effect on these securities. --Any stock that's been getting a lot of press lately. Since the end-of-year and end-of-quarter snapshots of mutual fund performance also involve a list of top security holdings, I suspect that mutual funds would want to add a "Google" to their list or something widely known for a few good reasons: (1) helps the common investor identify with their holdings and feel like they "understand" the mutual fund's position, (2) helps keep their more interesting and potentially long-shot plays out of publication to be scooped by competitors (assuming they are still in a buy-up period), and (3) helps show that they are up on the latest information and keeping abreast of the trends. I personally think most mutual funds are just marketing vehicles with most of the energy pumped into them focus on making them look good to new investors and not scare away current investors, rather than focus on making exquisite market decisions. After a little though, here’s two opinions on stocks “that would benefit from quarter-end window dressing”:

–Any stock that’s performed in the top 10% of the market that’s within the mutual fund’s cap or Value/Growth range. Since Mutual Funds don’t disclose when they purchased a particular security, it looks good on their publications and listing of “top 15 holdings” to show that they were on the right track. I would expect that this would have a positive, but short-term, effect on these securities.

–Any stock that’s been getting a lot of press lately. Since the end-of-year and end-of-quarter snapshots of mutual fund performance also involve a list of top security holdings, I suspect that mutual funds would want to add a “Google” to their list or something widely known for a few good reasons: (1) helps the common investor identify with their holdings and feel like they “understand” the mutual fund’s position, (2) helps keep their more interesting and potentially long-shot plays out of publication to be scooped by competitors (assuming they are still in a buy-up period), and (3) helps show that they are up on the latest information and keeping abreast of the trends. I personally think most mutual funds are just marketing vehicles with most of the energy pumped into them focus on making them look good to new investors and not scare away current investors, rather than focus on making exquisite market decisions.

]]> By: John http://www.tasgall.com/2006/09/26/window-dressing/comment-page-1/#comment-211 John Wed, 27 Sep 2006 11:53:49 +0000 http://www.tasgall.com/2006/09/26/window-dressing/#comment-211 I was going to post a warning that Sept was the end of the fiscal year for most mutual funds, making this week a crazy game of end-of-year shuffling. While I don't know yet how to trade to take advantage of this phenomenon, I do know that whatever happens in the market this week should be taken with a grain of salt and not projected forward. I was going to post a warning that Sept was the end of the fiscal year for most mutual funds, making this week a crazy game of end-of-year shuffling. While I don’t know yet how to trade to take advantage of this phenomenon, I do know that whatever happens in the market this week should be taken with a grain of salt and not projected forward.

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