Let the “Mark Ups” Begin

As we near the end of a month, and especially a quarter, there is a natural pressure upwards in the capital markets as professional investors rush to invest their cash and posture for the many printed reports that will be sent to their clients.

Marking up is a process by which the markets begin to move upward near the end of a month and especially the end of a quarter.  Many investors have reports that are filed on a monthly or quarterly basis. Given the dramatic moves the markets have had, many professional investors may be under pressure to show holdings of the big winners for the most recent time period.

This effect sometimes causes unique market movements that exagerrate movements. Recall most investors have no time frame for when the stock was purchased, only that it was in the portfolio on a certain date, i.e. The end of the quarter. While not dramatic, this movement sometimes leads to the capital markets getting ahead of themselves as cash is deployed, often times in a very focused manner.

It is possible to see the winners gain a bit more and visa versa as we move to the end of this reporting period. This is a short term phenomena and will often correct itself as we enter earnings season shortly, in October.

So if you see strange market movements, “mark ups” may be the reason.

JK