You should just do it and return in a year to tell us how it's going. Out of curiosity, how did your friend perform from Sept 2008 to Feb 2009 ??? Also, curious about your friend performance from mid 2000 to early 2003 ??? All the guys I know that went Long only prior to the above...no longer are in the game mainly because they refuse to change trading instruments (e.g. switch into something that goes up in a downtrend). Simply, if you're going to choose one side only, best to backtest your method in those opposite trends because down trends do occur (will occur) and sometimes long enough to have an enduring impact on your trading career if you're unwilling to adapt via changing trading instruments. Mark
How many football teams only run the ball? Last I knew teams both throw and run the ball to maximize their chance of winning. No different than traders who play BOTH the long and short side. Why deprive yourself a chance of making $$$ by only playing the long side? Plenty of big declines where longs were slaughtered. PS Not sure where you got the idea hedge funds only go long.
Yeah...I was wondering that too. Glad someone else caught that statement because some of the most well known hedge funds have been scrutinized by folks for their heavy short positions during economic crisis, political crisis, terrorist concerns or during the early stages of war (e.g. Gulf War and Iraq War). Surely many must remember the PR (bad publicity) that hedge funds get during those types of world events. Simply, if someone wants to only use a Long strategy because they believe or been told that hedge funds only go Long...that trader is in for a rude awakening. Mark
one of the few, solid and consistent edges the market offers everyone wanting to listen is to trade only buy-side. i stop carrying negative deltas more than 5 years ago. i dont believe there is a way to be profitable in the long run shorting the market, while there are good odds of being highly profitable trading longs. and to answer the inquiring minds out there, it is possible to trade long-only during the crash of 08 and still come ahead on a monthly basis without averaging down and with no overnight positions.
The S&P 500 is still below where it was 5 years ago. Logically it follows that there was at least as much money to make on the short side as on the long side. Of course markets go down much faster than they go up so shorting should be done a smaller percentage of the time, but when it works it should make you money faster.
you guys are missing the point. If you shorted the NASDAQ 100 AT 5000 you have been deep in the money for over 10 years!!!! If you shorted FNM and FRE and enron etc etc etc you made a killing!!! They are not coming back!!
In general, I'm mostly 100% long, 7 different accounts. I only sell long positions if I see a high probability downleg. I sell, then repurchase at a lower price. This strategy minimizes portfolio shrinkage. Since this is working for me, I can say, yes I am beating the buy and hold strategy. In 2009, I failed miserably. It was my first time at deviating from the buy and hold strategy. My favorite ETF EWZ did 124% in 2009, but I didn't do as well. Mid-August, I will minimize long positions because I anticipate a significant downleg.
This is a silly statement. How is shorting a losing game? In day trading, it doesn't matter. I short at least 90% of the time, have had 12 small losing days this year, and doubled my trading account. My biggest defect is not trading more longs and making twice as much money! This is day trading; price goes up and down, up and down, every day.