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Dressing Up A Portfolio
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Dressing up a portfolio refers to the practice of some portfolio managers of selling weak stocks and purchasing strong stocks near the end of a reporting period to improve the portfolio's appearance. Dressing up a portfolio enables managers to present an impressive-looking portfolio in quarterly or annual fund reports. Another term for dressing up a portfolio is window dressing. The problem with dressing up a portfolio is that stocks are generally sold at large losses and purchased at premiums for dressing up a portfolio. Dressing up a portfolio may produce a portfolio that looks good on paper but has a dismal investment performance. Another version of dressing up a portfolio is investing in stocks that don't match the fund's investing style. Adding highly speculative technology stocks to a blue chip fund is an example of dressing up a portfolio.
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