[ Some more off-topic thoughts and Integrated Diversification ]
What I would like to do is to have at least one interesting post a (very likely--decision to be made soon) for the CFA.
As for the others, feel free to pick up where I have left off--there's always room for more analysis here.
Another thought: through my work, I am coming to realize that the majority of the profits to be made are from trend changes, whether week, given now my much-constrained schedule to work and study from a fundamental and/or technical standpoint, and by remaining with such a position for the intermediate to long term, or until proven wrong. I've focused on this particular niche because it makes sense to me: whether overvalued or undervalued, I've been able to gather (and still doing it) tools that are allowing me to make decisions under bullish/overbought or bearish/oversold market conditions, a true necessity for the market-neutral manager.
One more thought: Why are such smart institutions like banks and other mutual fund giants unable to hold short positions in their funds? Stocks go up and down, and statistical studies have shown the risk to be lower in portfolios with short positions hedged against one's long positions. The purpose of diversification I thought was just for that reason: to reduce the portfolio's standard deviation.
Now when a portfolio is 100% long-exposed, where's the downside-risk diversification? I'll make up words as I go along here, but let's call the current long-based diversification to be horizontal diversification, and let's call long/short diversification vertical diversification. Shouldn't we be aiming for this type of market neutrality, this integrated diversification, where only stock-picking ability is rewarded?
That's all my current thoughts for now.
Rainier |
