Re: Unique financial nuggets
Theek hai muqawwee!
At the end of each quarter, as mentioned in post 41, mutual funds are required to disclose their holdings. That is, what percent of the assets are in each stock (or at least the top 20 stocks). In other words, they have to state it as follows:
Apple - 3%
Google-2.8%
Exxon 2.7%etc.
This quarter, Apple has gone up the most. Suppose a particular fund did not have any Apple stock in its holdings (or had very small amount of it). In order to impress current and future investors, it may go out and buy more Apple shares, so that when its holdings are released, people may get the impression the mutual fund knows what it is doing. This is known as window dressing. This results in stocks that have done well in the quarter being pumped higher. Apple yesterday was up close to 2%. It adversely impacts the finds share holders, since the fund bought stocks at a high price for the wrong reason.