Monday, June 23, 2008

Hedge Funds and Window Dressing

If you are a hedge fund manager, a mutual fund manager, or just someone who has to answer to investors ,you have decisions to make as the end of quarter draws near. Do you want to proudly showcase a portfolio of oil, energy and coal stocks or do you want to try to explain to a huge investor that you tried to outwit everybody else and tried to "bottom fish" the financial sector. The point I am trying to make is that funds that own the good stuff will overweight what is working and run away from the stuff that isn't. I was a manager and you don't ever want to be the "guy" that was swinging in the wind, all alone, trying to justify your existence. Unless something dramatically changes this week I think the strong names should continue and the weak(financials)to be sold. The XME gives you all the names that have been working,coal and steel etc, and XLE gives all the wonderful energy plays that have been working so nicely. If you are having trouble finding a particular name, these two will give you a seat at the table.

The rest of the week will be interesting and I expect tomorrow to be slow in front of Fed. I have a few more interesting charts to post later.


About Me

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I am a former hedge fund manager, broker and capital markets dude who now trades for his own account. I love what I do. I will try to post some stocks and an occasional chart that looks attractive for entry.I will also try to point out the idiocy of conventional wisdom and the lack of value added by the mainstream financial media. These postings should not be viewed as recommendations.