3 ms·
Hedge funds don't profit from generic 'instability'. They profit from correctly anticipating market movements, which isn't the same thing. Apply a truly random
by repolfx 8y ago
Hedge funds don't profit from generic 'instability'. They profit from correctly anticipating market movements, which isn't the same thing. Apply a truly random force to market prices and hedge funds will average out to break even. There were certainly plenty of financial institutions that got it wrong and lost money as a result of betting on Remain too.
- willyt 8y agoYes true, but if there's no instability then there is no opportunity; there are no losers, but also no winners. EDIT: Also by analysing FX market movements in relation to polling in the weeks and months leading up, it wouldn't be hard to make a correlation between Leave and lower priced GBP. All the economic institutions were saying Leave would be bad for the UK economy, so a leave vote is bound to shake confidence in GBP.
- mikeash 8y agoAren’t there ways to set up a bet that a particular price will move, where you profit if it goes up or down but lose out if it stays the same? If you can cause instability then that could be used to profit from it even if you don’t know which way it will go. Some quick searching tells me this is called a “long straddle” but I could be way off.