Back again to pair trading and market neutral strategies. Who benefits from them? How can they attract, what are the advantages over simple directional trading? Mostly, give the following reasons:
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Market neutral strategies are so popular because of their many advantages., such as
– the possibility of earning income regardless of the general market conditions
– the ability to diversify risks to values close to zero
– high capital intensity
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Attractive first argument — "the possibility of receiving INCOME regardless of the general market conditions"
But, I guess, the opposite will be true — "possibility of getting LOSSES regardless of the general market conditions"
Then what's the point in this statement at all. Can, for example, and apply the saying to lotteries versus stock trading– the possibility of receiving INCOME regardless of the state of the world economy" ….
The second argument is also sucked from the finger — "the ability to diversify risks to values close to zero"
Everyone understands perfectly what if the risk is close to zero, then the income will be the same or even less. After all, miracles do not happen and everyone went through the law of conservation of energy and Newton's laws at school. Share равна реакции и из ничего ничего не появляется. The lowest risk will be if you do not trade at all. And the smallest risk — if you trade with just one share, having a minimal cost.
The third argument is generally a fairy tale. — – "high capital intensity"
Все верно — if money has nowhere to go, you can buy all Ri contracts on one broker account, а на другом, sell them accordingly. Unmeasured amount of money will be involved. It's the same as before, in a planned economy, when did Brezhnev rule, it was necessary to master funds — wherever, but spend money, otherwise they will shoot.
И что же — who benefits from this type of stock speculation? Who benefits from these three points, analyzed above? The answer lies on the surface — Funds, managing other people's money. Collected money, for one half of the money bought, an identical instrument was sold to the other half and we are sitting, we receive a salary for management. Risk, практически нулевой, from & quot; market conditions" we do not depend, we can master at least one hundred billion and more money. Well earned nothing, but they did not lose as they lose 80% other funds. And we will find ourselves in a crisis market period — everyone loses, thrown out of windows, and we sit at zero, save capital and 50-70% overtaking the market, investors idolize….
This is how they are, market neutral strategies and funds, their engaging :)
