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Hedge Fund Momentum Trade Blows Up - Worst Losses Since '09
Not sure I understand just exactly what these guys were trying to do. It's something I'll re-read and ponder over the weekend. But a couple quick thoughts come to mind.
"Too clever by half" & "The best laid plans of mice and men often go awry."
It appears to me they use a strategy of "buy high and sell (short) low". My asset allocation strategy uses "buy low and sell high". I don't feel too sorry to them; their losses are the cost of education.
Perhaps under the guise of being market neutral, these guys set their computers to buy stocks that had been rising and sell short the ones that had been falling.
I can see now how that could run into problems down the road.
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Perhaps under the guise of being market neutral, these guys set their computers to buy stocks that had been rising and sell short the ones that had been falling.
I can see now how that could run into problems down the road.