1. What is long and short income?
Long and short returns refer to long and short returns.
Long position means that investors are optimistic about the stock market and expect the stock price to be bullish, so they buy the stock at a low price and sell it when the stock rises to a certain price to obtain the difference income.
Long position is a speculative way in futures trading. Speculators estimate securities, commodities, etc. If the price tends to rise, buy in advance, and then try to sell after the price rises, in order to obtain the difference benefit. This kind of speculation is based on buying first and then selling, and speculators have more securities or commodities to sell, so they are called "bulls". As opposed to "bear"
Short position: Although the stock price is relatively high at present, investors are not optimistic about the stock market prospect and expect the stock price to fall, so they sell the stock at a relatively high price and buy it when the stock falls to a certain price to obtain the difference income.
People usually refer to the stock market with a long-term downward trend as a short market, and the changes of stock prices in the short market are characterized by a series of sharp declines and small increases.
The change of stock price is determined by the comparison of the strength of bulls and bears. The bulls will predict the price increase and make a purchase decision. Bears will sell their shares because they predict that prices will fall. Like other transactions, when the bulls and bears agree on the price, the transaction is reached.
Second, although the long-short strategy is good, not everyone can play it.
From 65438 to 0949, an investor named AlfredJones founded the world's first hedge fund. As an investor, Jones thinks he is good at picking stocks, but not good at timing. So he buys bullish stocks and sells bearish stocks at the same time, without choosing the right time, just picking stocks. This is the prototype of the earliest long-short strategy.
More than 60 years have passed, and the long-short strategy has been greatly developed and improved. According to statistics, more than 20% hedge funds in the world choose to use long-short strategy for trading. The advantages and disadvantages PK of the long-short strategy are as follows:
1. Advantages
(1) income diversification
The profit of long-short strategy can be brought by the appreciation of bulls or the decline of bears, in other words, both the market ups and downs can make money. And you don't need to choose the right time, you don't need to bother to judge when to buy and when to sell, you just need to choose the right stock.
(2) Spanning the bull-bear cycle
Compared with the unilateral strategy of doing more in one direction and making money only in the bull market, the long-short strategy can make money continuously across the bull-bear cycle. In the bull market, you can get more income by increasing your holdings; In a bear market, you can increase your short positions to get more profits.
(3) Flexible control of risks
In the long-short balanced portfolio, although the asset categories of bulls and bears are different, the risk values offset each other, realizing hedging and greatly reducing the overall risk of the portfolio. Investors can also flexibly control risks by increasing or decreasing long/short positions.
Although there are many benefits, the long-short strategy is not suitable for individual investors.
(1) When individual investors decide to buy or short a stock, they need to use methods such as fundamental analysis and quantitative analysis of the stock. These methods rely on a lot of data analysis, but it is difficult for ordinary investors to get these data, and it is also difficult to get the real fundamental data of the enterprise. Only institutions have the resources and ability to obtain this information.
(2) Individual investors need to open the margin financing and securities lending business before they can short-sell, and the margin financing and securities lending business is not accessible to investors with general assets. Moreover, due to the increasingly strict financial supervision, the threshold for individual investors to carry out margin trading or stock index futures trading has gradually increased, and the policy has gradually narrowed, so their space for play is extremely limited.