Rule #1 Finance Blog

With Investor Phil Town

InvestED Ep. 140-  What is Market Neutral Investing?

We are back this week and jumping right back into looking at how the pros invest their money. You’ll learn what market neutral investing is, along with a few lessons when it comes to hedge funds and the terminology involved.

In Episode 140 You’ll Learn:

  1. What does Short Selling mean?
    • Definition: Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is motivated by the belief that a security’s price will decline, enabling it to be brought back at a lower price to make a profit.
    • They don’t have to include what might be half of their portfolio. When they owe the broker the stock back. It’s a bet that the stock is going down.
  2. What is Market Neutral Investing?
    • Everything that they own is in pairs (i.e one really incredible company along with one “bad” company). No matter where the market goes, one of the stocks will benefit. You have to be very good and experienced at choosing the right companies to pair with each other.
  3. Just because there is a market for something, doesn’t mean it’s an investment.
    • Cryptocurrency is the best relevant example of this.
  4. Where does the meaning “hedge” come from?
    • It can mean buying one side long and the other sort (market neutral investing).
  5. Coming Up Next Week: How to Look @ a Hedge Fund Manager’s Portfolio

Show Notes:

  • Curated List of Gurus on Rule #1’s Toolbox – Under “search” click “search gurus” to find 46 carefully selected gurus chosen by Phil.
  • DataRoma – List of 80 Gurus.

Learn how to invest like the best investors in the world from my free Transformational Investing webinar.

On the InvestED podcast, Phil and his daughter Danielle shine a light on the successful investing strategies that gurus like Warren Buffett have used for 80 years. Listen in for a great stock market education on basics, learn how to invest on your own, and follow along with real-time examples and investing tips from week to week.