There's lots of reasons why this rally likely continues through year end including low interest rates, vaccine news and stimulus packages but my opinion is the $25+ trillion of mutual funds and hedge funds are now chasing performance and being forced to put more cash to work.
In the world of active management (mutual funds & hedge funds) you are not only benchmarked against the indexes but you're also benchmarked against your peers within the same style box.
This means if you're a large cap growth fund you better beat the Russell 1000 Growth index but you also better beat the other large cap growth funds otherwise you're quartile ranking could drop which impacts your AUM (assets under management).
Finishing top quartile versus second quartile is a huge deal because next year when DIY retail clients and/or Financial Advisors are running screens for fund managers....which quartile you finish in could determine whether you screen well or screen poorly.
This means if you are an active manager and the market is going to "melt up" for the next 5 weeks then you better be fully invested or your performance will lag versus your benchmarks and your peers thus impacting your job security and your bonuses.
If you're running a hedge fund the stakes are even greater because crushing numbers the next 5 weeks could really impact your performance bonus and determine whether your LP's allocate more capital to your fund in 2021 or start asking about redemptions.
Even though the market has done very well this month the trillions of dollars in active funds, in money market funds and short term fixed income is more than enough fuel to keep these markets moving higher.

Have a great weekend and good luck with your Black Friday shopping.
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