The Benefits Of Long/Short Investment Strategies In A Low-Return Stock Market Environment
- Topics:
- Commercial Lending
- Tags:
- Benefit,
- Finance,
- Investment,
- PCT Publishing,
- Stock,
- Stock Market
- Source:
- PCT Publishing
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Overview: The goal of long/short strategies is generally to invest in undervalued stocks and to sell short overvalued stocks, thus achieving absolute positive returns and less risk than the overall market. Most long/short managers tend to be net long over a period of time ボハ that is, they usually have a larger long position than short position ボハ for the simple reason that the stock market rises over time. However, many managers have learned that they can use the short position to generate substantial profits in declining or trading range market environments. Many investors are still expecting stock market performance to return to the high levels of the late 1990's. If there were a modest increase in P/E multiples in future years, then expected market returns might be in the 10% area. However, if the P/E remains at 25 or declines, stock market returns are more likely to be in the 7.5% range or even less in coming years.
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Format: PDF | Size: 848KB | Date: Dec 2001 | Pages: 2
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