Window Dressing to push stock prices up?

Today, December 28, is the last trading day of the Philippine Stock Exchange (PSE). On Monday and Tuesday next week, the markets are closed for New Year celebrations, and the first trading day in 2008 is on Wednesday, January 2.

Is the market set to close higher today because portfolio managers and traders might try to “window dress” their portfolios in time for year-end 2007?

A bit likely. In a previous article, we explained that Window Dressing is a strategy employed by fund managers wherein they try to make their portfolio look as attractive as possible before presenting it to clients or stockholders.

In the days leading up to the end of the quarter or the year, fund managers would purchase recent winners while selling old holdings at a loss, in an attempt to show that they own the best-performing stocks of the period.

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