Window Dressing' Could Come Down;Market May Suffer if Managers Stop Preening Portfolios Quarterly
Now that the new quarter is starting, will professional money managers start undressing their portfolios?</br></br>If you've been reading the newspapers the past few weeks, you probably have heard this theory: Stock prices have been rising because of a phenomenon called window dressing.</br></br>That's when people who manage other people's money for a living suddenly wake up from a fog at the end of a quarter to find that other money managers have been buying better stocks than they have.</br></br>So these fog-bound managers try to trick their clients by purchasing stocks they should have bought earlier in the quarter. Their clients-presumably in as thick a fog as their money managers-take a look at the portfolio at the quarter's end and say to their money manager, "Nicely done. You owned all the right stocks."</br></br>A lot of Wall Street pros don't really think that this kind of inane exercise really goes on. After all, what client who's savvy enough to hire a money manager would be stupid enough to fall for such a trick? But newspapers over the years have attributed a lot of stock market rallies to window dressing, so let's be believers for now.