Long Short Investing: The 2022 Winner and Future Prospects

99rises performance: Our three main long-short blocks have outperformed the Nasdaq 100 Index by 23-38% in 2022, while our ZeroCarbon block outperformed by 38%.

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Long short investing, a strategy that involves taking both long and short positions in the stock market, has been a consistently profitable investment strategy for many years. In 2022, this strategy proved to be particularly successful, and there are several reasons why it is likely to continue to be a winner for the foreseeable future.

Volatility on the Rise

One of the main reasons that long short investing was the winner in 2022 is the increased volatility in the stock market. The COVID-19 pandemic, political uncertainty, and economic turmoil have all contributed to increased market volatility, which can make it difficult for investors to make consistent profits with traditional buy-and-hold strategies. Long short investing, on the other hand, allows investors to take advantage of both rising and falling markets, making it a more resilient strategy in times of volatility.

Quants & Algorithms Dominate

Another reason that long short investing has been successful in 2022 is the increased use of quantitative and algorithmic trading techniques. These techniques allow investors to quickly and efficiently analyze large amounts of data and make more informed investment decisions. This has made it easier for investors to identify mis-pricings in the market and take advantage of them, further increasing the profitability of long short investing.

Passive Investing

It is important to note that there are different opinions and perspectives on passive investing and its impact on the market. Some argue that passive investing, which involves investing in a diversified portfolio of assets that tracks a market index, can lead to market inefficiencies and overvaluation. These inefficiencies can create opportunities for long short investors to profit by taking advantage of mis-pricings in the market.

However, other people argue that passive investing has many benefits, such as providing investors with low-cost access to diversified portfolios and promoting long-term investment strategies. It is important to note that different investing strategies have different advantages and disadvantages, and it is up to the individual investor to determine what strategy is best for them.

Last Word

Long short investing has been a consistently profitable strategy for many years, and in 2022 it proved to be particularly successful. The increased volatility in the stock market, the rise of quantitative and algorithmic trading techniques, the popularity of passive investing and ETFs have all contributed to the success of this strategy.

Given these factors, it is likely that long short investing will continue to be a winner for the foreseeable future.