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BULL’S EYE: The short end of a long stick


BULL’S EYE: The short end of a long stick

Legend says that beyond hubris lies one’s nemesis. Mine met me with a flying headbutt - but there is reason for optimism

Jeremy Thomas

For the sin of greed in January 2015 I gulled myself into investing in a managed portfolio that had gained 50% in the previous 12 months. Not quite a long-short hedge fund, although it did have the facility via its in-house equity derivatives to hold short positions, it relied on varying degrees of gearing on 20 individual stocks to pump up returns on the long side. Driven by an active momentum strategy, the fund’s hapless stewards entered the year positioned for disaster.

I ignored the first inklings of unease, when the fund slipped beneath its JSE top 40 benchmark, because I have had it drummed into me by asset management industry shills that short-termism is the death of the small investor. To consider selling during any time frame shorter than three, five, or even 10 years was deemed to be daft. I had chosen to stake a sum worth six months of salary at damn-fool levels of risk for the expected rewards; I was not backing out.

Prudence would have entailed choosing an “acceptable” level of loss at the outset, and sticking to it. A 20% haircut, say, would have hurt like hell but the bleeding would have stopped. But, as they say, bulls make money; bears make money; pigs get slaughtered...

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