Many pundits like to use "end of quarter window dressing" as a reason why markets should outperform in the days leading up to the end of the quarter. The theory goes that during times when the market is moving higher, professional money managers want to have equities on the books to make their holdings look better when their investors check out their quarterly statements. Along with having a low amount of cash on the books at the end of quarters when the market has done well, money managers also want to have the best performing stocks on the books.
But during the current bull market, the markets have actually performed poorly in the final days. Since the fourth quarter of 2002, the S&P 500 has averaged a decline of -0.01% in the final two days of the quarter, and a decline of -0.28% on the final day of the quarter. It has gone up just 4 out of 19 times on the last day of the quarter, and over the past 12 quarters, the final day has been negative 11 times.
