Imagine losing 80% or more while, all around you, investors are basking in the glory of one of the biggest bull markets in history. Imagine racking up year after year of losses while stocks are going up nearly 400%.
That’s what it’s like to run a short-selling fund that hedges against the risk of a falling stock market.
If you’re a contrarian who is naturally attracted to parts of the market that have been losing money on the grounds that they are ripe for recovery, bear this in mind about these funds: On average, in the long run, you will lose money if you hold them.
Over time, stocks tend to go up more — and more often — than they go down. “So one would not expect an investor to be permanently short and, in fact, most should be permanently long,” says Mohsen Fahmi, co-manager of the $2.1 billion Pimco StocksPlus Short Fund.
More here – The Wall Street Journal