Go to Jeff Salisbury LWGate Home Page.From: "Edward W. Gjertsen II" <ed@macktracks.com>
Subject: RE: [CANSLIM] Hedging
Date: Fri, 17 Jan 2003 09:20:25 -0600
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Yes that was the intent - we currently have a 25% exposure - 75% cash
Ed Gjertsen II
ed@macktracks.com
- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Gene Ricci
Sent: Thursday, January 16, 2003 5:25 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Hedging
Ed, is the ProFund .. 2x leveraged ... meaning that your 10% position
was really 20%?
Thanks for your input,
Gene
- ----- Original Message -----
From: Edward W. Gjertsen II <mailto:ed@macktracks.com>
To: canslim@lists.xmission.com
Sent: Thursday, January 16, 2003 5:03 PM
Subject: [CANSLIM] Hedging
Hedging comes in all shapes and forms. We hedged our current position 2
days ago by utilizing a 10% position in the ProFunds Ultra Short OTC
fund. A 2 beta inverse fund. As we currently manage ERISA accounts in
our portfolios - standard short positions are not allowed. Going into
this weeks earnings and owning EBAY, SYMC, GRMN, VIP and one biotech
stock, we felt for the first time the need to hedge. Theoretically the
ProFund Ultra Short will provide a 200% gain on any losses occurring in
the Nasdaq 100. . Even with the rebalancing, we feel the Nasdaq 100 has
sufficient weighting in Tech to help offset positions
Yesterday the fund was up 3.89% and will be up some today (1/16/2003).
We were lucky to get such good performance from SYMC today. A hedgers
dream; make money on the hedge and on the underlying portfolio. Happens
too infrequently to be giddy.
We were not looking for a dollar for dollar offset, just a way to
protect some profits if weakness occurs. Those of you that follow
tradingmarkets.com know many of the traders were looking for a period of
weakness to occur starting two days ago. We will lift our hedge when we
believe the market has stabilized, this of course is a "gut" call.
Prosperous investing to all.
Ed Gjertsen II
ed@macktracks.com
- -----Original Message-----
From: Gene Ricci [mailto:genr@swbell.net]
Sent: Thursday, January 16, 2003 4:27 PM
To: My Friends
Subject: Can We Make Money Hedging ???? - Maybe So.... Come to the next
VectorVest Meeting - January 25th and see
Yes, we're going to discuss how to use VectorVest to 'hedge' at the next
meeting, January 25th.
Please do some advance reading so that the session will be more
meaningful for you.....
Hedge
Making an investment to reduce the risk of adverse price movements in an
asset. Normally, a hedge consists of a protecting position in a related
security.
If you owned a stock, then short selling an equal amount would be a
hedge.
This strategy is used when you are unsure what the market will do. A
perfect hedge reduces your risk to nothing (except for the cost of the
hedge).
Hedge Fund
An aggressively managed portfolio taking positions on safe and
speculative opportunities. Most hedge funds are limited to a maximum of
100 investors. For the most part hedge funds are unregulated because it
is assumed the people investing in these are very sophisticated and
wealthy.
Don't be fooled by the name, true hedging refers to reducing risk, but
many hedge funds use options, short selling and any other strategy to
increase leverage and get a maximum rate of return.
On the other hand, because many hedge funds use futures, swaps, and
arbitrage strategies you could argue that they diversify away some of
the investor risk from the stock market.
Long/Short Equity
A hedge fund strategy that involves buying certain stocks long and
selling others short. There usually isn't a restriction on the country
that the stocks trade in either.
This type of hedge fund basically has free reign to buy or sell what it
likes. A long/short equity hedge fund is usually considered to be higher
risk.
Equity Market Neutral
A hedge fund strategy that seeks to exploit differences in stock prices
by being long and short in stocks within the same sector, industry,
market capitalization, country, etc. This strategy creates a hedge
against market factors.
It's the ultimate strategy for stock pickers because stock picking is
all that counts. For example, a hedge fund manager will go long in the
10 biotech stocks that should outperform and short the 10 biotech stocks
that will underperform. Therefore what the actual market does won't
matter (much) because the gain/loss is offset by the other. If the
sector moves in one direction or the other, the gain on the long stock
is offset by a loss on the short.
Market-Neutral Equity Style Investment (example)
The main objective of market-neutral style of investment is to minimize
market and sector risk by buying stocks, which are expected to
outperform the market, and selling stocks short, which are expected to
under perform the market. This style offers the chance to make positive
investment returns in a down market as well as in up market.
Theoretically, when long and short positions are equally weighted and
securities are paired for each sector then the market-neutral style
should render the portfolio insensitive to market risk. Pairing of
stocks is done to match long and short position for each sector
separately to cancel out risk associated with each position. Goal of
market-neutral investment style is to keep market exposure as little as
possible. Market exposure of a portfolio can be measured by the
following formula:
Market exposure = Long exposure - Short exposure
Capital
In practice there are always some uncovered risks, mainly stock
selection risk, trade execution risk and market risk of unhedged
positions. In addition, hedge positions may not completely eliminate
market or sector risk. Therefore, active management is required to
adjust positions regularly and keep portfolio in line with acceptable
market exposure. Our attempt will not be to eliminate market risk but to
minimize it by keeping low value of market exposure.
Selection of stocks will be based on anticipated price performance
relative to the other stocks of same sector that is selecting leaders
and laggards. Portfolio will buy stocks of leaders, which are
anticipated to beat the market and sell short stocks of laggards, which
are expected to lag behind.
To effectively implement investment style, the main focus will be on mid
and large-cap stocks of large float and high trading volume. Up to 10
percent of the portfolio may consider opportunities in small-cap stocks.
When a sector is in up trend, portfolio holdings will be bias towards
long positions. Consequently, in the downtrend, portfolio holdings will
be bias towards short positions. Timing of initiating long and short
position may vary based on sector trend line. Therefore, at times there
may not be any hedge for a particular position in portfolio.
Portfolio may sell covered options on any long or short position when
total annualized return (option premium plus profit in stock, if Called
or Put) results in at least 30 percent or better.
All short positions in stocks, if not hedged, will carry a STOP Loss GTC
order at all times. Initial STOP Loss order will be placed between 5 to
15 percent loss level based on stock volatility and technical
indicators.
Links to other articles on hedging:
http://invest-faq.com/articles/strat-hedging.html
Hedge Ratio <http://investopedia.com/terms/h/hedgeratio.asp>
http://www.investopedia.com/terms/h/hedgeratio.asp
<http://investopedia.com/terms/b/basisrisk.asp> Basic Risk
<http://www.investopedia.com/terms/b/basisrisk.asp>
http://www.investopedia.com/terms/b/basisrisk.asp
<http://investopedia.com/terms/p/portfolioinsurance.asp> Portfolio
Insurance
<http://investopedia.com/terms/p/portfolioinsurance.asp>
http://www.investopedia.com/terms/p/portfolioinsurance.asp
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<p class=3DMsoNormal><font size=3D2 color=3Dblue face=3D"Times New =
Roman"><span
style=3D'font-size:10.0pt;color:blue'>Yes that was the intent – we =
currently
have a 25% exposure – 75% cash</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dblue face=3D"Times New =
Roman"><span
style=3D'font-size:10.0pt;color:blue'> </span></font></p>
<div>
<p class=3DMsoNormal><font size=3D2 color=3Dblue face=3D"Times New =
Roman"><span
style=3D'font-size:10.0pt;color:blue'>Ed Gjertsen II</span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dblue face=3D"Times New =
Roman"><span
style=3D'font-size:10.0pt;color:blue'>ed@macktracks.com</span></font></p>=
</div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original =
Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b> =
owner-</span></font><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'>canslim@lists.xmission.com<=
/span></font><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'>
[mailto:owner-</span></font><font size=3D2 face=3DTahoma><span =
style=3D'font-size:
=
10.0pt;font-family:Tahoma'>canslim@lists.xmission.com</span></font><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'>] <b><span
style=3D'font-weight:bold'>On Behalf Of </span></b>Gene Ricci<br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> Thursday, January =
16, 2003
5:25 PM<br>
<b><span style=3D'font-weight:bold'>To:</span></b> </span></font><font =
size=3D2
face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'>canslim@lists.xmission.com<=
/span></font><font
size=3D2 face=3DTahoma><span =
style=3D'font-size:10.0pt;font-family:Tahoma'><br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> Re: [CANSLIM] =
Hedging</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'>Ed, is the =
ProFund ..
2x leveraged ... meaning that your 10% position was really =
20%?</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'>Thanks for your =
input,</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans =
MS"'>Gene</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
</div>
<blockquote style=3D'border:none;border-left:solid black =
1.5pt;padding:0in 0in 0in 4.0pt;
margin-left:3.75pt;margin-top:5.0pt;margin-right:0in;margin-bottom:5.0pt'=
>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial'>----- Original Message =
- ----- </span></font></p>
</div>
<div style=3D'font-color:black'>
<p class=3DMsoNormal =
style=3D'margin-left:.5in;background:#E4E4E4'><b><font size=3D2
face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>From:</span=
></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> <a
href=3D"mailto:ed@macktracks.com" title=3D"ed@macktracks.com">Edward W. =
Gjertsen II</a>
</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>To:</span><=
/font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> <a
href=3D"mailto:canslim@lists.xmission.com" =
title=3D"canslim@lists.xmission.com">canslim@lists.xmission.com</a>
</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>Sent:</span=
></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> Thursday,
January 16, 2003 5:03 PM</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><b><font size=3D2 =
face=3DArial><span
style=3D'font-size:10.0pt;font-family:Arial;font-weight:bold'>Subject:</s=
pan></font></b><font
size=3D2 face=3DArial><span =
style=3D'font-size:10.0pt;font-family:Arial'> [CANSLIM]
Hedging </span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
</div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblue
face=3D"Times New Roman"><span =
style=3D'font-size:10.0pt;color:blue'>Hedging comes
in all shapes and forms. We hedged our current position 2 days ago =
by
utilizing a 10% position in the ProFunds Ultra Short OTC fund. A 2 =
beta
inverse fund. As we currently manage ERISA accounts in our =
portfolios
– standard short positions are not allowed. Going into this =
weeks
earnings and owning EBAY, SYMC, GRMN, VIP and one biotech stock, we felt =
for
the first time the need to hedge. Theoretically the ProFund Ultra =
Short
will provide a 200% gain on any losses occurring in the Nasdaq 100. =
.
Even with the rebalancing, we feel the Nasdaq 100 has sufficient =
weighting in
Tech to help offset positions </span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblue
face=3D"Times New Roman"><span =
style=3D'font-size:10.0pt;color:blue'>Yesterday the
fund was up 3.89% and will be up some today (1/16/2003). We were =
lucky to
get such good performance from SYMC today. A hedgers dream; make =
money on
the hedge and on the underlying portfolio. Happens too =
infrequently to be
giddy.</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblue
face=3D"Times New Roman"><span style=3D'font-size:10.0pt;color:blue'>We =
were not
looking for a dollar for dollar offset, just a way to protect some =
profits if
weakness occurs. Those of you that follow tradingmarkets.com know =
many of
the traders were looking for a period of weakness to occur starting two =
days
ago. We will lift our hedge when we believe the market has =
stabilized,
this of course is a “gut” call. </span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblue
face=3D"Times New Roman"><span =
style=3D'font-size:10.0pt;color:blue'>Prosperous
investing to all.</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
<div>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblue
face=3D"Times New Roman"><span style=3D'font-size:10.0pt;color:blue'>Ed =
Gjertsen II</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 =
color=3Dblue
face=3D"Times New Roman"><span =
style=3D'font-size:10.0pt;color:blue'>ed@macktracks.com</span></font></p>=
</div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D2 =
face=3DTahoma><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original =
Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b> Gene Ricci
[mailto:genr@swbell.net] <br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> Thursday, January =
16, 2003
4:27 PM<br>
<b><span style=3D'font-weight:bold'>To:</span></b> My Friends<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> Can We Make =
Money Hedging
???? - Maybe So.... Come to the next VectorVest Meeting - January 25th =
and see</span></font></p>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'>Yes, we're going =
to discuss
how to use VectorVest to 'hedge' at the next meeting, January 25th.<br>
<br>
Please do some advance reading so that the session will be more =
meaningful for
you..... <br>
<br>
</span></font><strong><b><u><font size=3D4 color=3Dblue face=3D"Comic =
Sans MS"><span
style=3D'font-size:13.5pt;font-family:"Comic Sans =
MS";color:blue'>Hedge</span></font></u></b></strong><font
face=3D"Comic Sans MS"><span style=3D'font-family:"Comic Sans MS"'><br>
<br>
Making an investment to reduce the risk of adverse price movements in an =
asset.
Normally, a hedge consists of a protecting position in a related =
security. <br>
<br>
If you owned a stock, then short selling an equal amount would be a =
hedge. <br>
<br>
This strategy is used when you are unsure what the market will do. A =
perfect
hedge reduces your risk to nothing (except for the cost of the hedge). =
<br>
<br>
</span></font><strong><b><u><font size=3D4 color=3Dblue face=3D"Comic =
Sans MS"><span
style=3D'font-size:13.5pt;font-family:"Comic Sans MS";color:blue'>Hedge =
Fund</span></font></u></b></strong><font
face=3D"Comic Sans MS"><span style=3D'font-family:"Comic Sans MS"'> =
</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'><br>
An aggressively managed portfolio taking positions on safe and =
speculative
opportunities. Most hedge funds are limited to a maximum of 100 =
investors. For
the most part hedge funds are unregulated because it is assumed the =
people
investing in these are very sophisticated and wealthy. <br>
<br>
Don't be fooled by the name, true hedging refers to reducing risk, but =
many
hedge funds use options, short selling and any other strategy to =
increase
leverage and get a maximum rate of return.<br>
<br>
On the other hand, because many hedge funds use futures, swaps, and =
arbitrage
strategies you could argue that they diversify away some of the investor =
risk
from the stock market. </span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><strong><b><u><font =
size=3D4
color=3Dblue face=3D"Comic Sans MS"><span =
style=3D'font-size:13.5pt;font-family:"Comic Sans MS";
color:blue'>Long/Short Equity </span></font></u></b></strong></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><b><u><font size=3D4 =
color=3Dblue
face=3D"Comic Sans MS"><span =
style=3D'font-size:13.5pt;font-family:"Comic Sans MS";
color:blue;font-weight:bold'><br>
</span></font></u></b><font face=3D"Comic Sans MS"><span =
style=3D'font-family:"Comic Sans MS"'>A
hedge fund strategy that involves buying certain stocks long and selling =
others
short. There usually isn't a restriction on the country that the stocks =
trade
in either. <br>
<br>
This type of hedge fund basically has free reign to buy or sell what it =
likes.
A long/short equity hedge fund is usually considered to be higher risk. =
<br>
<br>
</span></font><strong><b><u><font size=3D4 color=3Dblue face=3D"Comic =
Sans MS"><span
style=3D'font-size:13.5pt;font-family:"Comic Sans MS";color:blue'>Equity =
Market
Neutral</span></font></u></b></strong></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'><br>
A hedge fund strategy that seeks to exploit differences in stock prices =
by
being long and short in stocks within the same sector, industry, market
capitalization, country, etc. This strategy creates a hedge against =
market
factors. <br>
<br>
It's the ultimate strategy for stock pickers because stock picking is =
all that
counts. For example, a hedge fund manager will go long in the 10 biotech =
stocks
that should outperform and short the 10 biotech stocks that will =
underperform.
Therefore what the actual market does won't matter (much) because the =
gain/loss
is offset by the other. If the sector moves in one direction or the =
other, the
gain on the long stock is offset by a loss on the short. <br>
<br>
</span></font><strong><b><u><font size=3D4 color=3Dblue face=3D"Comic =
Sans MS"><span
style=3D'font-size:13.5pt;font-family:"Comic Sans =
MS";color:blue'>Market-Neutral
Equity Style Investment (example)</span></font></u></b></strong></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'><br>
The main objective of market-neutral style of investment is to minimize =
market
and sector risk by buying stocks, which are expected to outperform the =
market,
and selling stocks short, which are expected to under perform the =
market. This
style offers the chance to make positive investment returns in a down =
market as
well as in up market. Theoretically, when long and short positions are =
equally
weighted and securities are paired for each sector then the =
market-neutral
style should render the portfolio insensitive to market risk. Pairing of =
stocks
is done to match long and short position for each sector separately to =
cancel
out risk associated with each position. Goal of market-neutral =
investment style
is to keep market exposure as little as possible. Market exposure of a
portfolio can be measured by the following formula:</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'><br>
Market exposure =3D <u>Long exposure – Short exposure</u><br>
=
=
=
Capital<br>
<br>
<br>
In practice there are always some uncovered risks, mainly stock =
selection risk,
trade execution risk and market risk of unhedged positions. In =
addition,
hedge positions may not completely eliminate market or sector risk. =
Therefore,
active management is required to adjust positions regularly and keep =
portfolio
in line with acceptable market exposure. Our attempt will not be to =
eliminate
market risk but to minimize it by keeping low value of market =
exposure.</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'><br>
Selection of stocks will be based on anticipated price performance =
relative to
the other stocks of same sector that is selecting leaders and laggards.
Portfolio will buy stocks of leaders, which are anticipated to beat the =
market
and sell short stocks of laggards, which are expected to lag behind. =
</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'><br>
To effectively implement investment style, the main focus will be on mid =
and
large-cap stocks of large float and high trading volume. Up to 10 =
percent of
the portfolio may consider opportunities in small-cap stocks. =
</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'>When a sector is =
in up
trend, portfolio holdings will be bias towards long positions. =
Consequently, in
the downtrend, portfolio holdings will be bias towards short positions. =
Timing
of initiating long and short position may vary based on sector trend =
line.
Therefore, at times there may not be any hedge for a particular position =
in
portfolio. </span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'>Portfolio may =
sell covered
options on any long or short position when total annualized return =
(option
premium plus profit in stock, if Called or Put) results in at least 30 =
percent
or better. <br>
All short positions in stocks, if not hedged, will carry a STOP Loss GTC =
order
at all times. Initial STOP Loss order will be placed between 5 to 15 =
percent
loss level based on stock volatility and technical indicators. <br>
<br>
Links to other articles on hedging:</span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'><a
href=3D"http://invest-faq.com/articles/strat-hedging.html">http://invest-=
faq.com/articles/strat-hedging.html</a></span></font></p>
</div>
<div>
<table class=3DMsoNormalTable border=3D0 cellpadding=3D0 =
style=3D'margin-left:1.0in'>
<tr>
<td style=3D'padding:.75pt .75pt .75pt .75pt'>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
</td>
</tr>
<tr>
<td style=3D'padding:.75pt .75pt .75pt .75pt'>
<p class=3DMsoNormal><b><font size=3D2 face=3DVerdana><span =
style=3D'font-size:10.0pt;
font-family:Verdana;font-weight:bold'><a
href=3D"http://investopedia.com/terms/h/hedgeratio.asp">Hedge =
Ratio</a></span></font></b><font
size=3D2 face=3DVerdana><span =
style=3D'font-size:10.0pt;font-family:Verdana'><br>
<a =
href=3D"http://www.investopedia.com/terms/h/hedgeratio.asp">http://www.in=
vestopedia.com/terms/h/hedgeratio.asp</a></span></font></p>
</td>
</tr>
</table>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'><a
href=3D"http://investopedia.com/terms/b/basisrisk.asp"><strong><b><font =
size=3D2
face=3DVerdana><span =
style=3D'font-size:10.0pt;font-family:Verdana'>Basic =
Risk</span></font></b></strong></a><br>
<a href=3D"http://www.investopedia.com/terms/b/basisrisk.asp"><font =
size=3D2
face=3DVerdana><span =
style=3D'font-size:10.0pt;font-family:Verdana'>http://www.investopedia.co=
m/terms/b/basisrisk.asp</span></font></a></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Comic Sans MS"><span
style=3D'font-size:12.0pt;font-family:"Comic Sans MS"'><a
href=3D"http://investopedia.com/terms/p/portfolioinsurance.asp"><strong><=
b><font
size=3D2 face=3DVerdana><span =
style=3D'font-size:10.0pt;font-family:Verdana'>Portfolio
Insurance</span></font></b></strong></a><br>
<a href=3D"http://investopedia.com/terms/p/portfolioinsurance.asp"><font =
size=3D2
face=3DVerdana><span =
style=3D'font-size:10.0pt;font-family:Verdana'>http://www.investopedia.co=
m/terms/p/portfolioinsurance.asp</span></font></a></span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
</div>
<div>
<p class=3DMsoNormal style=3D'margin-left:1.0in'><font size=3D3 =
face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> </span></font></p>
</div>
</blockquote>
</div>
</body>
</html>
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