[otakucode]

That's called 'hedging' and is literally all hedge funds do. So long as markets remain 'sensible' its a brilliant strategy. Markets, of course, do not remain sensible for long. I'm presently listening to 'When Genius Failed', a book about the implosion and utter failure of Long Term Capital Management, one of the biggest hedge funds who learned just how utterly batshit irrational the market can actually be.

[0xBABAD00C]

> That's called 'hedging' and is literally all hedge funds do.

Uhhh, no

[sjcsjc]

Yeah the term hedge fund seems something of a misnomer nowadays.

For anyone interested:

The term "hedge fund" originated from the paired long and short positions that the first of these funds used to hedge market risk.

https://en.wikipedia.org/wiki/Hedge_fund

[perl4ever]

For practical purposes, these days, I believe a "hedge fund" is basically defined by its high fees (2&20), lack of regulation and disclosure compared to a mutual fund, and its restriction to "qualified investors" who are supposed to be wealthy enough to absorb losses. Certainly quite a few so-called hedge funds get a lot of publicity for the opposite of hedging - making wildly risky bets to try to beat benchmarks.