Fred, Window dressing is certainly not illegal. However, DEC 31 would be an arbitrary date as many if not most mutual funds have fiscal years that end in months other than December.
Seriously, there are several factors at work here that have nothing to do with window dressing:
1. Markups by specialists and market makers. Dec 31 tends to be a day of thin, even abbreviated trading. That means that the floor controls the pricing, not big orders. Since specialists and upstairs traders do mark their holdings at year end, you may see a bid to offer that encourages a price to go a certain way. In other words, to mark his inventory at a decent level, the specialist may be willing to absorb sales at a decent price and then run the stock up a bit before the close, so all his stocks are priced at a good level for the income statement. On normal days, he wouldn't do this as news might come in to torpedo him and the institutions may try to stick his bid with a huge block. But on New Year's Eve, he may have the confidence to play the manipulation game.
2. Drunks buy things they shouldn't and then sell on Jan 2 before their bosses or wives find out.
3. Momentum players buying something because it went up yesterday.
So, I see lots of factors that the press and the pundits try to call window dressing that are more likely other influences.
MB |
