John Rothe's  Instablog

John Rothe
Send Message
John Rothe is CEO & Founder of Riverbend Investment Management. John founded Riverbend in 2006 to provide institutional style investment management to individual investors. Prior to starting the firm, John was a Vice President & OMEGA Portfolio Manager with Oppenheimer & Co., and... More
My company:
Riverbend Investment Management
My blog:
Riverbend Market Commentary
  • Long Short Investment Strategy – What It Is, How It Works, And Why You Should Care 1 comment
    Nov 19, 2012 4:58 PM | about stocks: SPY

    (click to enlarge)

    Best Type Of Account Structure SMA Or Mutual Funds

    "So I should just buy a long short mutual fund, right?"

    Not so fast, mutual funds have numerous limitations that can hurt the performance of a long short investment strategy. The majority of mutual funds have restrictions on how much cash they can raise and need to deal with investor withdrawals during bad markets.

    A better solution is to use a separate managed account structure - where the investor's money is held in its own, separate account:

    (click to enlarge)

    Why Should I Care?

    Why bring this up now? The average economic cycle since 1854 was just 56 months and the median 44 (30 months of expansion and 14 of contraction). Source The Economist, Deutsche Bank

    While, the start of recessions are declared well after the fact, the median average means the US is about to start another down cycle. And many economists are seeing warning signs.

    Perhaps Ben Bernanke and the Fed will be able to extend the cycle longer, but many are starting to worry that they are running out of ammo. In addition China is slowing down and Europe just officially announced that they are in a recession:

    The Business Cycle Dating Committee of the Centre for Economic Policy Research (the European counterpart of the U.S. NBER) last week issued a declaration that Europe entered a new recession a year ago, dating the business cycle peak at 2011:Q3

    (click to enlarge)

    Europe Has Entered A Recession

    (click to enlarge)

    GDP Europe

    Even if the Fed's QE policies can extend our current cycle, global markets are sure to become more volatile and will impact US markets - providing long short investors an opportunity.

    Stocks: SPY
Back To John Rothe's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • ldemoura
    , contributor
    Comment (1) | Send Message
    Why the growth in the number of hedge funds has influenced the recent underperformance of long/short equity strategy?
    22 Apr 2014, 10:00 AM Reply Like
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.