Window Dressing is a term used to describe the activity of mutual funds to sell bad performing stocks and buy good performing stocks before the reports are given to its investors. Giving the idea of strong portfolio.
This is the term I learned today as I increase our cash flow to P60,939 and yield at 5.4. Because of this, strong stocks, blue chips companies sky rocketed in price and the bad performers plummet even more.
We are not here to trade the stocks but to invest for the long term. My realization from all of this is that, if window dressing occurs every year and strong companies are being bought no matter what the price at the end of the year, we are very much in line with the principle of buying strong companies that pays out large dividends because at the end of the day, you'll be earning a bonus from its capital gains, because mutual fund managers will be buying them anyway at the end of the year.
So my suggestion will be is this, find 10 strong companies that you have made a very diligent effort to research until you are completely satisfied that the company is a keeper for a long time, then invest more money every month, buying its shares no matter if it raise its price or plummet. If window dressing will happen every year or quarter then this only validates our investing principle to buy strong companies and keep them, not trade them.
After all, strong companies will most likely have a dividend for us. And the capital gains from mutual fund managers and traders that plays by its volatility can only add to your assets.
Annual Cash Flow: P60,939.00
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