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This was how many international hedge funds began in the 1960's. In theory it
looked perfect: big core holding, some shorts and some speculative longs and just
adjust the long/short balance to optimixe profits. Most if not all lost on the
short side, couldn't react fast enough, etc. and lost huge amounts in the late
60's-70's market drops. The suggestion is to read up on hedge funds, since this
is what you are after and they do it better now, but don't assume that this is the
Ho;y Grail.
Regards,
Bob Wiseman
HARELSDB@xxxxxxx wrote:
> In a message dated 98-08-18 23:52:32 EDT, you write:
>
> << Does it have to be either/or? Since there are always some stocks moving
> up and some moving down, have you considered having both longs and
> shorts, perhaps in accordance with a running average of the
> Advance/Decline ratio?
>
>
>
> The conventional wisdom (i.e. the trend is your friend) is, and my limited,
> though rather expensive experience, has been that it is better to be on the
> right side of the market. That is, long when the market is moving up and
> short when it is moving down. Conceivably, one could develop an indicator
> based on market breadth and aportion their portfolio among long and short
> positions on that basis. No offense, but, my reation to that strategy is "why
> bother". Whether the market is moving up and I want to be long or the market
> is moving down and I want to be short, I can always find a lot more
> opportunities than I have money to use to my advantage.
> Arguably, I could optimize my profits by holding long and short positions at
> the same time, however, there is a great deal of collective market wisdom that
> says don't do it. Refer to "Reminiscences of a Stock Operator" by E. Lefever
> and W. J. O'Niel's discussion of the M in CANSLIM for two examples of that
> wisdom.
>
> That's just my opinion. It's your money and when I am cleaning your pool
> while you are away vacationing on the French Riviera you can say "I told you
> so".
>
> Dan
> Pocatello, ID
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