The End of The Quarter Often Creates An Upward Bias

Many glossy statements, brochures, and reports are printed at the end of each quarter. Many times large money managers and investors tend to create an upward bias at the end of the month, and especially the end of the quarter by deploying cash into investments. 

While there is never a guarantee in investing, often times the capital markets have an upward bias as we near the end of a quarter due to the deployment of cash.  Given the recent volatility in the capital markets, we would expect a possible positive push through the end of the week and possibly into next week.  As we stated in a prior post, “Not in a Straight Line” markets tend not to move in a straight line, but given the timing, volatility, and possible cash investments it would not surprise us to see a slightly extra upward bias as we head into the last five trading days of the quarter.

Of course the capital markets are always subject to a major negative headline story or event, but at this time investors seem to be locking on the positives, and ignoring the negatives, adding to the possible upward movement in capital markets.

Are investors being too optimistic?  We only have to wait a few more weeks as second quarter earnings reports will shed light on this question. Patience and remember “Not in a Straight Line”! JK