Over the weekend, I did an evaluation of the long short portfolio. Since May 2, 2012, the S&P has declined 6.0%. During the same time, my long short portfolio has declined 2.3%, which seems good initially. However, when I reviewed the portfolio change by long positions and short positions, I was disappointed. The longs had fallen by 1.0% and the shorts also had a negative return of 1.3% despite the overall market decline. Two shorts have risen signficantly in price during the market decline, which resulted in an overall negative return for the short positions.
I would have been better off just investing in stocks of strong, resilient companies versus also shorting companies I believed are doing poorly.
For now, I will continue my long short positions for at least another week. If I continue to experience poor results from the short positions, I will close the positions and only continue working on the long side for the portfolio.
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This is not financial or investing advice. Please consult a professional advisor.
Copyright © 2012 Achievement Catalyst, LLC
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