Month end trading. May ending up for first time since 2009, which as you know is the year following 2008 melt-down. so that’s kinda significant. Every month this major window dressing exercise rolls out. Those funds who want to show certain stocks in the portfolio will load up and make the statement look good. Then they sell when the investor losses visibility.
OK we know some investors are naïve and need to be tricked. Not good but that’s the way it is. This is called dumb money. Eventually the money part disappears and they just become dumb but in the meantime….
But who really is dumb. If you have built your investment house with dumb money and now need to play this game give your head a big shake. Maybe its you that’s dumb.
Investors need to look at returns after fees. Yes after fees. If you cannot prove your merit on the basis of returns then a month to month window dressing charade only fools the manager and the dumb money. Smart money will eventually catch on the move on.
So investor and investment manager, which one are you?
George Gutowski writes from a caveat emptor perspective.