The Responsible Trader

THE RESPONSIBLE TRADER – TRADING LESSONS – WINDOW DRESSING

We are now on the last days of the year and usually these are the times when we see window dressing. To accountants and  stock market veterans this term is very familiar.  For those who are not familiar with it let me simplify it for you.

Window dressing is similar to persons putting on a makeup.  As you can see on this picture of  Cameron Diaz with and without a makeup. (Although I am using Cameron Diaz as an example I am using the term persons so I will not be accused by the ladies of being a male chauvinist pig. Also it is not only women putting on makeup nowadays so the term persons is more appropriate).  Putting on a makeup is used to enhance  beauty or hide flaws (wrinkles, ugly spots, etc. In a similar, manner, window dressing is practiced to improve the appearance of the financial report.

Based on my observation, there are two  types  of window dressing being done. The first is by the Company itself. The second is by the Fund Managers.

Window Dressing by the Company

Companies typically window dress their financial statements by some of the means we already described in Chapter 3 on  Fundamental Analysis, so later on they can do Trade shows games to appealed people.  This is done to show better performance of  the company to its shareholders. Window dressing is also done during the quarter or end of the company’s fiscal year to show a good price for  the stock  when this is reported in  the financial statements.

Window Dressing by the Fund Managers

Window dressing is also employed by some Fund Managers to show good  performance in their portfolios before presenting It to their clients.  To accomplish this, they usually sell stocks with large losses and buy stocks that have strong uptrends  performing well towards the end of the quarter or fiscal year.

As a result of the Window Dressing, some stocks display unusual price movements. One good example of this is PCOR as  indicated in Chart 40 when the price jumped from the closing price  of P7.45 last July 30, 2015  to P10.00 last July 31, 2015.

Window dressing may or may not happen. Just be sure to take advantage of the situation when it happens.

Good luck on all your trades.

NOTE: No change in numbering of Figure is made so that those who have my books, “The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market” and “Swing Trading with TRT – a  Definitive Guide for Swing Trading the Philippine Stock Market”  can refer to them easily.

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In line with our VISION, A RESPONSIBLE TRADER IN EVERY FILIPINOS HOME, we aim to continue promoting financial literacy on the area of stock market trading and investing to our countrymen both here and abroad through the following:

1. We have successfully launched “Swing Trading with TRT – a Definitive Guide for Swing Trading the Philippine Stock Market” last September 2, 2019. This book is the second in our Responsible Trader Education Series.

You can download Chapter 1 and see the Table of Contents here: https://drive.google.com/file/d/1NZEABnQMiQ_zenEMs0lPFWweX4WBxBHg/view?usp=sharing

The first book, “The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market” provided all the basic knowledge that a trader needs to know in order to trade the Philippine Stock Market effectively and efficiently. The first book is about the basics. This second book is about the specifics.

2. The Book: “The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market” now earned the name “The Bible of Philippine Trading.” You can download Chapter 1, Section 1 of the book here: http://theresponsibletrader.com/the-responsible-trader-hope-for-trading-knowledge-test/. For those interested in the hard copy, please send email to: ninjatrader919@gmail.com Subject: The Responsible Trader – Hard Copy.

As requested by those abroad and those who want the book in digital form, we have produced an eBook version. For those interested please send email to: ninjatrader19@gmail.com Subject: The Responsible Trader – eBook Version.

The book can also be ordered online through our publisher, Central Book Supply. Just go to: http://central.com.ph/bookstoreplus then click Search – The Responsible Trader.

3. The Website: :http://www.theresponsibletrader.com where we publish our daily newsletter Top Ten Smart Money Moves, Stock Trading Lessons, and Inspirational Materials. (FREE)

4. The YouTube Channel: https://www.youtube.com/theresponsibletrader – where you can learn the course “Master’s Certificate in Technical Analysis” which was simplified in an easily understood manner. You can download these videos and learn them at your own convenient time. (FREE)

5. My Slideshare: http://www.slideshare.net/TheResponsibleTrader – where you can view and download copy of the Powerpoint Presentation of my TRT-POV (The Responsible Trader’s Point of View) of the videos posted in our Youtube Channel. (FREE)

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DISCLAIMER There is a very high degree of risk involved in TRADING. Past results are not indicative of future returns. Nothing contained in this newsletter constitutes a solicitation, recommendation, PROMOTION or endorsement of any security. In accordance with the Responsible TRADER’s Creed: I will never tell and you take full responsibility for all your TRADING results