The Goldman Guide: A Dirty Secret
|Written by Rob Goldman|
In this week's edition of The Goldman Guide we tell you a secret regarding institutions and companies this time of year, along with where the institutional money has gone, and where it is headed right now
The Goldman Guide
INSIDE OUR 10 MIN PODCAST:
INDICES & CATALYSTS
A Dirty Secret
This is the last week of the first quarter, 2023. Believe it or not, this is a very important time period. There is a dirty secret that most retail investors do not know. That secret is the fact that this period is essentially a scramble period for publicly traded companies and for institutional investors.
Actually, the scramble period likely began in earnest for many institutions a week ago. Institutional investors sell big losers, especially those that are big names around this time of year. Why? Because when quarterly reports are issued next month, they show top ten holdings, and in some cases, all holdings. And the fund managers don’t want to look foolish. I know. I managed a mutual fund and small cap money---but I never engaged in such acts. You’d be surprised how many do. The managers are afraid of redemptions due to poor performance—and poor decision making, in general.
And the companies? Well let’s just say that it is common knowledge that as quarters wind down, leaders bang the phones to try and get sales in the door that are pending. They work their asses off to ship as much merchandise as possible out the door, get purchase orders, or new service contracts signed etc. On the expense side if they can defer expenses, they do. Why? They don’t want to miss quarterly estimates and have the stock crater.
On the investing side, portfolio managers want to have exposure to YTD winners and in some cases will buy new ones if they don’t have them. They also don’t want to sit on an inordinate amount of cash, given how that looks. So, you tend to see investments in ETFs, if applicable, or big names. Why? Listen to our podcast to find out…
The Market Today
AAII Sentiment Survey (figures rounded)
Getting close to the Bearish threshold of 50%
What does the fund flows data tells us? And how do FAANG relate to it?
What do the underlying new ETF investments and redemptions portend?
Is the major hurt on the banking sector over, for now?
Should I invest like an institutional investor?
Will inflation or company earnings affect near-term performance?
WHERE MONEY IS HEADED (AND NOT)
Big ETFs remain in play
Anything that has letters: AI
FAANG---but not all
Technology, Oil & Gas and not ESG
Away from VIX and VXX for a spell
Avoid financials, biotech, consumer discretionary---for the moment
What will go up must go down first
Thoughts on our ideas? Shoot me an email: [email protected].
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