Window Dressing
As per my note yesterday, the market took a little breather (for those who do not understand what breather means, simply put, the market went down). Don't worry, this was in the script ( I mean, my script). Anyone who listens to the market news, probably heard how we are so close to the record high and that we are heading there soon. Well, it is true that we will hit the high soon but it may not be next week. Next week is an important week for professional money managers. It is a window dressing week. So, what does window dressing mean?
Unlike you and me, the professional traders have to show a progress report (in writing) to the investors at least four (4) times per year. These reports are called quarterly, semi-annual and annual reports. They are produced at the end of March, June, September and December. In the report, money managers have to show exactly what they own in their portfolios. Most investors are interested in looking at the top ten holdings in the portfolios. Now, here's the thing: Let's assume that the manager owned Nam Tai (NTE: one of our holding). As you know, NTE went down a lot in 2006 (this is why we own it), which makes most people think of NTE as a looser. The money manager does not want people to think that he/she buys loosers. Thus they sell it (or do not buy it) until the report is produced. Remember, they can buy it on October 1st without anyone noticing it (it's not included in the report until December).
Bottom line: These activities (it is real) make recent winners go up even more during the window dressing week and also make recent loosers go down further (however, this is only a short term reaction). Many managers try to buy the recent winners (like AKAM) so that it can be added in the report; making them look especially smart ( because the report does not show when the manager bought them, it just show that they own it).
So, how does this information worth anything to you?
This means that stocks like our NTE, XMSR,MATK,AUTO will be especially good buys next week. The pros will be selling these hoping that they can buy it back later. Any weakness in above stocks next week will be a good entry point. Try to buy all four - they are great buys now. Just these four stocks as a group will probably outperform most of professionally managed funds a year from now. Can someone make a note of this and remind us later?
Tomorrow, I am leaving to Delaware to watch the NASCAR racing ( obviously, I have tickets to one of the best seats available). Remember, I don't go cheap on food and entertainments. Wooo, I can't wait. I wish all of you to have a safe and fun weekend.
P.S: Say "I love you" to someone this weekend.
PPS: Donate a few dollars to charities of your chioce this weekend. Go on .... try. It will make you feel so much better. Please, make a habit of giving some back to others. I will try my best to make you more than you gave. Deal?
Unlike you and me, the professional traders have to show a progress report (in writing) to the investors at least four (4) times per year. These reports are called quarterly, semi-annual and annual reports. They are produced at the end of March, June, September and December. In the report, money managers have to show exactly what they own in their portfolios. Most investors are interested in looking at the top ten holdings in the portfolios. Now, here's the thing: Let's assume that the manager owned Nam Tai (NTE: one of our holding). As you know, NTE went down a lot in 2006 (this is why we own it), which makes most people think of NTE as a looser. The money manager does not want people to think that he/she buys loosers. Thus they sell it (or do not buy it) until the report is produced. Remember, they can buy it on October 1st without anyone noticing it (it's not included in the report until December).
Bottom line: These activities (it is real) make recent winners go up even more during the window dressing week and also make recent loosers go down further (however, this is only a short term reaction). Many managers try to buy the recent winners (like AKAM) so that it can be added in the report; making them look especially smart ( because the report does not show when the manager bought them, it just show that they own it).
So, how does this information worth anything to you?
This means that stocks like our NTE, XMSR,MATK,AUTO will be especially good buys next week. The pros will be selling these hoping that they can buy it back later. Any weakness in above stocks next week will be a good entry point. Try to buy all four - they are great buys now. Just these four stocks as a group will probably outperform most of professionally managed funds a year from now. Can someone make a note of this and remind us later?
Tomorrow, I am leaving to Delaware to watch the NASCAR racing ( obviously, I have tickets to one of the best seats available). Remember, I don't go cheap on food and entertainments. Wooo, I can't wait. I wish all of you to have a safe and fun weekend.
P.S: Say "I love you" to someone this weekend.
PPS: Donate a few dollars to charities of your chioce this weekend. Go on .... try. It will make you feel so much better. Please, make a habit of giving some back to others. I will try my best to make you more than you gave. Deal?
posted by Jaewoo | 5:50 PM
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