Yesterday it occurred to me why the financial markets might have been going sideways for about 2 weeks…window dressing. What the heck is that? Window dressing is the age old practice of portfolio managers, who have had good performance in a quarter, selling their stocks toward the end of the quarter in order to lock in their gains.
The end of the second quarter is an especially important quarter end for portfolio managers because they are required to publish semi-annual reports for shareholders. I am guessing the selling activity we saw at the end of the quarter, which was largely taking place in the absence of significant news, was motivated by window dressing.
If I am right, then that means that good news during this earnings season is likely to attract lots of cash and we are likely to see a lift off in share prices.
Jason
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