You're here:  Home --> Dictionary --> M --> Market Neutral

Short Selling
Sector
Long-short
Distressed Sec

Market Neutral
Term category: Strategies
In 10 words or less: A trading strategy that attempts to have no exposure to stock market volatility.

Definition: Market neutral investing attempts to remove the market risk from their portfolios by being both long and short in a given sector. A market neutral fund may pick two similar stocks and purchase the one it feels is better and short the stock that is weaker, hoping that the stock it likes more outperforms the other stock.

StockJargon Advice: Market neutral investing is an attractive strategy because it's thought to have less volatility that traditional investing.  However, investors aren't always rational so anytime you short a stock, there's considerable risk that it'll rise indefinitely.

Related Articles

Hedge Fund Strategies
Hedge funds use a variety of different strategies to attract investors and earn high returns. Read more about them in this article.

Fund Classifications
Learn about the different types of fund classifications and objectives…

Hedge Funds
Looking for some big gains and high risks? You might want to consider these…

Related Books

Trade Like a Hedge Fund by James Altucher
Running Money By Andy Kessler
The Five Rules for Successful Stock Investing by Pat Dorsey
One Up on Wall Street by Peter Lynch

# -A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z