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Will Funds Engage in Panic Buying or Lock in Profits?

December 1, 2009

Things will likely not be boring in the markets going  into year end. After such a large run, clients are desperate to participate and portfolio managers are under pressure to show that they have participated. That said, one could make the argument that fund managers sitting on large gains will be desperate to lock in profits and avoid giving up ground going into year end. It is hard to say which will occur, but my bet is that we are due for a large move heading into January. If cornered to choose a side, I would bet on further strength into year end because of favorable seasonality and the overall feeling I get that  profit desperation outweights caution. So strap on your seatbelts and get ready for a wild ride!

2 Comments leave one →
  1. geckoman permalink
    December 2, 2009 7:56 am

    When you say Clients are desperate to get in I am not sure which clients you are talking about. If you are talking about retail clients I beg to differ. The ICI data clearly shows tht retail clients are yanking money out of equities at quite a rate. 13 straight weeks of equity fund outflows. As an RIA I can also report anectdotally that most of our clients base is not excited about getting anymore invested here. There is a deficit of trust an no one believes what is going on. So it’s obvious that institutions and quants are the only one’s playing this game in here.

  2. david varadi permalink*
    December 2, 2009 11:04 am

    well, I can only report what I read or hear as I am “not on the front lines” as you are. whether people are truly desperate to get in or desperate to get out is certainly up in the air. I would find it hard to believe that we will see stagnation either way. Thanks for sharing that information, I appreciate it and so do readers. I do agree that there is a lot of manipulation going on.


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