Reflecting on the Long Short Portfolio

In our long short portfolio, I decided to overweight the long positions last week.   I did so because I expect a market bounce next week.  So having a higher percentage of long stocks should be beneficial.  However, I have at best a 50/50 track record for predicting daily market movements.  So being slightly long may be a negative.

Overall, I'm still getting good results from the long short portfolio.  The portfolio was down about 0.8% while the market was down 3.0%.  The results were helped mainly by the short positions which were up 3.6% for the week.   By hedging with short positions, I feel better about purchasing some long term positions since the short position will help mitigate the declines in the long positions.

Next week will be interesting since the market may have a short term relief rally if the Fed offers QE3 as possible action.  

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

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