TBP-Running Out The Clock

The Big Picture.com is out with an interesting piece this AM on how hedge funds have significantly under perfomed the major indices this year and how mutual funds may be incentivized to lock in gains as the year turns into its final quarter.  

Here is the pertinent part of the article:

"Mutual Fund managers sitting on big gains have plenty of macro reasons to move away from equities — Asia has softened, Europe is unable to resolve their crisis, and even China is facing economic  difficulties. Iron Ore, Copper, and Crude Oil are retreating, sending an ominous warning about the economy.

But from a strategic game theory approach, its not the macro issues that are giving them pause — its the desire to lock in gains and bonuses before the year ends, perhaps even before Q3 ends.

One group NOT sitting on big gains are hedge Fund managers: They have missed 2012′s equity. HFRX Equity Hedge Index is up a mere 3.5% this year, lagging the S&P by an astonishing 14% (total including dividends). Perhaps they may pile in and drive markets higher.  

Regardless, lots of investors have to be wondering, I am paying 2&20 for what?"  

This just points to something I've stressed here for years especially when we talk about the normal cyclical trading market patterns that occur almost every year.  The only print that matters on Wall Street is the last one of the year because that's the number on which most money managers get paid.

Link:  Running Out the Clock on 2012 Stocks.

*Long ETFs related to the S&P 500 in client and personal accounts.