Added: 02/13/2006 |
Money strategies -predicting, managing, and optimizing fluctuations in the currency marketsMoney Strategies develop new techniques and explains classic tools available for predicting, managing, and optimizing fluctuations in the currency markets.
International Currency Strategy Organizations are dedicated to the analysis and improvement of business processes in the area of managing money strategies. Through the exchange of data gathered in benchmarking surveys, you will be able to benefit from the experience of many companies. Membership is open to individuals employed as permanent employees of companies in the area of managing money strategies.
One of the money strategies is a hedge fund. A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost any opportunity in any market where it foresees impressive gains at reduced risk. Hedge fund strategies vary enormously -- many hedge against downturns in the markets -- especially important today with volatility and anticipation of corrections in overheated stock markets. The primary aim of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions.
There are approximately 14 distinct investment strategies used by hedge funds, each offering different degrees of risk and return. A macro hedge fund, for example, invests in stock and bond markets and other investment opportunities, such as currencies, in hopes of profiting on significant shifts in such things as global interest rates and countries? economic policies. A macro hedge fund is more volatile but potentially faster growing than a distressed-securities hedge fund that buys the equity or debt of companies about to enter or exit financial distress. An equity hedge fund may be global or country specific, hedging against downturns in equity markets by shorting overvalued stocks or stock indexes. A relative value hedge fund takes advantage of price or spread inefficiencies.
Knowing and understanding the characteristics of the many different hedge fund strategies is essential to capitalizing on their variety of investment opportunities.
A wide range of hedging strategies are available to hedge funds. For example:
-selling short - selling shares without owning them, hoping to buy them back at a future date at a lower price in the expectation that their price will drop;
-using arbitrage - seeking to exploit pricing inefficiencies between related securities - for example, can be long convertible bonds and short the underlying issuers equity;
-trading options or derivatives - contracts that values are based on the performance of any underlying financial asset, index or other investment;
-investing in anticipation of a specific event - merger transaction, hostile takeover, spin-off, exiting of bankruptcy proceedings, etc.;
-investing in deeply discounted securities - of companies about to enter or exit financial distress or bankruptcy, often below liquidation value.
Many of the strategies used by hedge funds benefit from being non-correlated to the direction of equity markets.
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