Birchtree
TSP Talk Royalty
- Reaction score
- 143
Re: Birchtree's account talk
From the WSJ:
Late in October, senior money managers from J.P. Morgan Chase & Co. met in a Park Avenue office and discussed the billions of dollars they were holding out of the quickly rising stock market. Stocks had surprised them by soaring 13% since mid-July, and their clients were missing the party. Some at the meeting were nervous a Democratic victory in November's congressional elections would cause a slide. Nevertheless, the bankers took note of improving economic indicators and changed course, shifting half their cash into U.S. stocks. The momentum we have now could carry us through to the end of the year. It is hard to see what would stop it except surprising economic data.
Similar meetings have been happening across the country - and the urgency is increasing this month as the end of the year approaches. Money managers are judged, and compensated, based largely on how well they do as of Dec. 31 - especially at hedge funds, which typically keep 20% of each year's profit for themselves. Mutual funds also live and die on their ability to show strong annual returns. Those who have kept betting against the stock market face real pain if they fall too far behind their more bullish competitors.
The stock market's four month rally, marked by 18 record closes in the DJIA since the start of October, isn't being driven primarily by bullish investors - but by still-skeptical former bears who increasingly see no choice but to join in. Hedge-fund managers, who can change course more quickly than their rule-bound mutual fund counterparts, have been steadily reversing their bets on a downturn since the summer. That has increased the pressure on remaining holdouts as money managers' year-end performance figures loom anf their fear of clients' wrath heightens.
From the WSJ:
Late in October, senior money managers from J.P. Morgan Chase & Co. met in a Park Avenue office and discussed the billions of dollars they were holding out of the quickly rising stock market. Stocks had surprised them by soaring 13% since mid-July, and their clients were missing the party. Some at the meeting were nervous a Democratic victory in November's congressional elections would cause a slide. Nevertheless, the bankers took note of improving economic indicators and changed course, shifting half their cash into U.S. stocks. The momentum we have now could carry us through to the end of the year. It is hard to see what would stop it except surprising economic data.
Similar meetings have been happening across the country - and the urgency is increasing this month as the end of the year approaches. Money managers are judged, and compensated, based largely on how well they do as of Dec. 31 - especially at hedge funds, which typically keep 20% of each year's profit for themselves. Mutual funds also live and die on their ability to show strong annual returns. Those who have kept betting against the stock market face real pain if they fall too far behind their more bullish competitors.
The stock market's four month rally, marked by 18 record closes in the DJIA since the start of October, isn't being driven primarily by bullish investors - but by still-skeptical former bears who increasingly see no choice but to join in. Hedge-fund managers, who can change course more quickly than their rule-bound mutual fund counterparts, have been steadily reversing their bets on a downturn since the summer. That has increased the pressure on remaining holdouts as money managers' year-end performance figures loom anf their fear of clients' wrath heightens.
