Investor's (H)Edge Portfolio Up for 10th Consecutive Day

What a trader seeks when employing an absolute return long/short strategy is to make money in any and all market conditions. This is a noble goal, but of course it can be quite difficult to achieve. The Sabrient Investor's (H)Edge Portfolio is a "bite-sized" version of our high-performance institutional long/short portfolios. It is designed for individual investors and accessible as part of our Platinum subscription package. It has performed quite well since inception in January 2009 (up +27.1% in 2009 and +6.7% year-to-date in 2010). Impressively, it was up today for the 10th consecutive day, while the S&P 500 has been up 5 days and down 5 days during the same timeframe.

Absolute return is the actual return that an asset or portfolio of assets achieves over time, without regard to how it performs relative to a benchmark (i.e., relative return). A typical example of relative return is a long-only mutual fund that seeks to outperform a market index, fund category, or its peers. On the other hand, an absolute return strategy seeks positive absolute returns in all market conditions, whether the market goes up or down—usually by employing some form of “market neutral” approach, including short selling, futures, options, leverage. The resulting portfolio generally will show low correlation with the overall market performance.

An absolute return portfolio would need to comprise a basket of long positions (to benefit from an increase in stock prices) and a basket of short positions (to benefit from a decline in stock prices). You are simply seeking to capture the performance spread between the longs and shorts, so skillful stock selection is necessary. For the Investor's (H)Edge Portfolio, stock selection is based upon Sabrient's quantitative stock rankings.

In a nutshell, an absolute return strategy like this seeks to make money whether the market goes up or down. In fact, even if the overall market stays flat, you might still make money on the relative performance of your long and short stock baskets.