The reason the long short mutual fund wasn’t thought up many decades ago, or maybe it was but it couldn’t be put into practice, is simply because of laws regulating how much a mutual fund could earn from short positions. However, in 1997 an amendment to the securities laws allowed funds that capitalized on short positions, like the long short mutual fund, to come into existence. As a result, the long short mutual fund is legal today although they are still regulated by securities laws to some degree. These regulations encompass things like how many short positions may be held as well as the use of derivatives among others. Choosing a long short mutual fund to invest in is tricky. That’s because there are many different stocks out there and choosing the right ones can mean success while choosing the wrong ones can end up in disaster. Before choosing to go the long short mutual fund route make sure you talk with your investment manager and find out how proficient he/she is at managing long short mutual funds. If for some reason you don’t feel comfortable you will want to see out an experienced, or as experienced as possible, long short mutual fund manager to ensure your investment is as successful as possible. Since the long short mutual fund has only been in existence for a little more than a decade there is no significant historical data to point to whether or not these are solid investments that will be successful for investors over the long term. Of course, there are some long short mutual fund investments that are doing very well and then there are some that have not performed at the level they were anticipating. This doesn’t necessarily mean anything because the long short mutual fund is not a short term, get rich quick investment. Rather, it’s an investment that is designed to work the market no matter whether it is up or down to result in a successful long short mutual fund in the end.

There are bonds, stocks, mutual funds, hedge funds, and many other methods for investing money. Some are conservative, others liberal, but the uniting factor is there is risk with all of them. Even the relatively new long short mutual fund is risky despite appearing to be resistant to market conditions. It’s important for investors to realize that while the long short mutual fund appears to be a wonderful way to invest and safeguard that investment regardless of the market’s ups and downs there is no guarantee in that. The success of any long short mutual fund depends significantly on the stocks that make up that fund as well as the person managing it. That’s one point where many investors get confused with the long short mutual fund. The idea of it sounds great and in principal it is great. However, in order for the long short mutual fund to be successful it must be managed well and the right stocks must be chosen. This is the hard part and the reason it is so important to choose an investment manager with significant long short mutual fund management experience. You could manage the fund yourself, too, if you feel you are up to it and knowledgeable of the market. The hype surrounding the long short mutual fund strategy makes it sound like a win/win situation and it is if it is managed correctly and the right stocks are chosen. However, there is risk involved and exposure. Investors should not be blindsided by the opportunity to recover some of their lost investments from the recession. Instead, they should take the decision very seriously, research the long short mutual fund, the various managers, and find a setup that works well for them. In today’s investment climate the most important thing any investor can have is versatility. The long short mutual fund embodies that, but it is also recommended that investors save money in other ways like with IRAs, certificate of deposits, and other secure investments that provide a safety net should the stock market take another nosedive. Remember, the goal of the long short mutual fund is to protect the investment even if the market takes a sharp turn down. In reality, however, there are no guarantees and there are many variables that come into play. Not to mention the long term success of a long short mutual fund has yet to be determined since they are still relatively new forms of investing.

So far I’ve researched Fuel Cell Energies, which partly runs on natural gas. I’ve also researched Solar Powered Energies which as we know relies on the Sun…What are some good long term stocks or funds within alt. energies? Do you think alt. energies are a promising investment? I’d feel great knowing I’m helping invest into a Go Green company while making some $.

If you are an investor you may have heard about the long short mutual fund and are wondering what it’s all about. It’s natural you would be interested because it is being touted as the new way to invest in the stock market. So far, the long short mutual fund method of investment has been successful and many investors are pleased with this method. However, there are no guarantees when it comes to investing in a long short mutual fund and investors should not get confused with the potential success of this fund with “guaranteed” success. In an investment climate where so many investors are disheartened and significantly less wealthy there is no shock that many are looking for the next sure way to get back on top. Despite the long short mutual fund being a really great investment method it’s not guaranteed and in the stock market there are no sure things. That’s why it is so important for investors to understand the implications of the long short mutual fund not to mention its vulnerabilities and shortcomings. Perhaps the biggest vulnerability of the long short mutual fund is not the stock market’s fluctuations but rather time. The long short mutual fund is still a new investment method and as a result there is not enough history to evaluate its performance over the long haul. Because of this there is no way for investors to look at the history of various long short mutual funds and see how they have performed over decades. Sure, there is at least 10 years worth of data to help investors when it comes to deciding on whether or not to invest in a long short mutual fund, but that’s not nearly the same as 60 or 70 years worth of data. There are many investing strategies and methods that have been in play for many years that work well. The problem with many of those is that there was no built in strategy to compensate for the fluctuations within the market. The long short mutual fund does have a built in strategy and the goal is to keep the long stocks afloat during a down market through use of the short stocks and vice versa. These types of stocks work together throughout the ups and downs of the market to produce positive returns.

For most of the history of the Mutual Fund Industry average annual turnover hovered around 15 to 20 percent. This means that 15-20 percent of the funds portfolio changed each year. Put another way, the average holding period for a stock in a mutual fund portfolio was 8 years. Starting in the late 1970′s and accelerating in the mid-1990′s, average annual turnover is now 100 percent. Put another way, the average holding period is now less than one year. So, while preaching that a steady, long term approach was appropriate for their customers, the industry has itself moved from a stock-ownership mentality to stock-rental mentality.

I am going to save for another day the discussion about how this makes it more difficult to achieve results commensurate with the enormous fees levied. Be aware that this is aspect is the biggest problem with a short-term mentality. However, there are quantifiable reasons to avoid high turnover.

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It’s always interesting to learn more about new investing strategies and to give various methods a try to see their returns. One particular strategy is the long short mutual fund strategy. This particular strategy is one that combines two types of investments, both long and short, to limit exposure and risk. The goal involves picking a variety of stocks with both long and short positions to include in the fund. The long positions are expected to improve their value while the short positions are expected to lose some of their value. At first, this might not sound like a very good investing strategy. Who would want to invest in a fund that includes positions that are expected to lose from the get go? The answer to that is that while the short positions may lose while the market is going up they will gain when the market is on its way down, meaning the losses of the long positions will be made up for by the gains of the short positions. Investors tired of the market’s volatility and of losing their hard earned money may be especially receptive to the long short mutual fund because it is essentially a fund with insurance built in. There is no guarantee of success, of course, which is the inherent risk of investing in the stock market. However, the stocks chosen for the fund are done so in order to reduce risk and exposure as much as possible. What are Long and Short Positions? The investor needs to understand the difference between a long and short position. Basically, a long position may be taken simply by purchasing a stock and if it goes up in value the investor makes money. Short positions are somewhat different, however. In many cases taking a short position involves borrowing a stock from your broker, selling it, and then hoping it goes down in value so that it can be re-purchased at a lower price than was initially paid so the “borrowed” share can be returned. That’s an example that is simplified to assist in the understanding of how the long short mutual fund works. There are generally 20-30 long stocks and 30-40 short stocks within one fund that work to balance each other and make money for the investor.

My stock portfolio currently looks like this:
1. Dell
2. Microsoft
3. Bob Evans
4. Suncor Energy
*** My hot stock picks would be energy stock. I’m currently waiting for more alternative energy stocks to go public.

What’s your stock portfolio look like and what are your stock pics both short term and long term? Let’s share information for the benefit of all.

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The idea of investing in the stock market is a scary one too many new investors as a result of the loss of billions of dollars and lifetime’s worth of investments after the recession took a nosedive during the most recent recession. Experienced investors who lost a great percentage of their investment may not want to choose such a risky form of investment in the future, if they even have anything left to invest. Others may simply take to hiding their money under their mattress and not concern themselves with the market at all. Despite the current stock market climate investors, new and experienced, can make sound investments that are likely to offer a return on the investment year in and year out regardless of market conditions. That may sound like it’s impossible, especially to investors who have been burned badly. However, the long short mutual fund is not your typical investment. In fact, it’s an investment that takes into account the ups and downs of the market and uses that movement in its strategy. It’s somewhat complex how the long short mutual fund works in detail, but the basic strategy is to buy long stocks that will outperform other stocks in a good market and short stocks that are expected to lose. However, these short stocks will pull their weight when the market is down and help cover any losses that might occur with the long stocks. It’s basically like creating a portfolio and adding in some insurance that while not guaranteed will most likely keep investors from losing everything. As a result, the long short mutual fund is actually a pretty smart way to invest your money and safeguard that investment in spite of market fluctuations. Remember, the market is volatile and will go up and down. The long short mutual fund is expected to perform well over time and resist the volatility of the market. Investors interested in the long short mutual fund should know they may purchase stocks from the entire market to add to their portfolio or focus on specific sectors. Not all sectors react in the same way to changes in the stock market and even with the most market neutral stocks you will still expose yourself to risk. That’s important to keep in mind because although the goal of any long short mutual fund is to be successful and provide positive returns year in and year out there is no guarantee of that.

One of the biggest benefits of the long short mutual fund is that it does not the market to be at its highest point to make money. In fact, the long short mutual fund is designed to be profitable through all market conditions. This is the first factor that catches the attention of potential long short mutual fund investors. The reason why is because so many have lost thousands of dollars with their investments in the stock market recently as a result of the market crash. Investors are now looking for ways to make money in all market climates and the long short mutual fund is one of those ways. Investment managers are beginning to catch on to the benefits of the long short mutual fund, too, and recommending them to their clients. This is because it is more likely their clients will make money year in and year out regardless of whether the stock market is racing up or down. There are few investment managers out there today who are willing to bet on the stock market anymore simply because there are too many world factors that will play a role in whether the market is going up or down. It’s a smarter move to invest in a long short mutual fund that implements a specific strategy to make money in all market conditions. Recommendations If you are interested in a long short mutual fund and want to know more about it simply call your investment manager and have a chat. Find out how much he/she knows and whether this is a type of investment they are capable of handling. Despite the long short mutual funds ability to survive through all markets that does not mean it doesn’t need a capable and experienced manager to handle it. That’s why it is important to find an investment manager with proven success managing other customers long short mutual fund investments. If you are savvy and knowledgeable of the market as well as how the long short mutual fund works then you might want to try your hand at managing your own investments. That’s not recommended to newbies, however, because it could spell disaster.