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The only difference is the "hold the whole market first" strategy requires more capital. That's not the only difference. It's not even the biggest difference.
by minimax 13y ago
The only difference is the "hold the whole market first" strategy requires more capital.
That's not the only difference. It's not even the biggest difference. The major difference is that in your scenario you have a big unhedged exposure to the market (your p&l depends on the performance of A,B,C) and in the case of just shorting D you don't (doesn't matter what happens to A,B,C). That's a pretty big difference.
- mathattack 13y agoFair enough, though perhaps we're going too deep down the rabbit hole for a video game. :-)
- xerophtye 13y agoyeah that's not a short at all :/ that's just a long position in all the other stocks and hoping that somehow those stocks have a short position in stock D