All time highs!

Posted by on Feb 16, 2017 in ArbMaker News! | No Comments

bullThis week US stock markets hit records. Will the run continue?

Long/short approaches should not care either way – it is generally directional investors and traders who rejoice (and hope). In an ideal world one would have exposure to both strategies. But there are always important provisos to consider for long only strategies.

There is sometimes comfort taken from “momentum” arguments when buying high. Others view purchases made at all-time highs under the assumption that, over the “long term”, the passage of time will forgive paying too much today.

Maybe so, but there is no guarantee of that. A long term investment is sometimes only a euphemism for a short term investment gone bad. Worse, events may subsequently prove the purchase did not fully appreciate the context in which it was made.

We point you to an article here showing how such an attitude unravelled for one set of professional private equity investors caught in a “we must not miss out on this” mindset. It’s about a 10 minute read.

Any investment can tank. Often that may be due to factors beyond one’s control. But succumbing to the temptation of a roaring market without taking everything – most of all price – into account is avoidable!

Better still, hedge.


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