Up-From Cost Sell Disclipline and Target Price Sell Disclipline? Schweser defines Up-From Cost Sell Disclipline - Sell a stock once it is increased, either percentage or dollar amount from purchase price. Target Price Sell Disclipline - determines stock’s fundamental value at time of purchase and sell stock later when it reaches target price. Both sound very similar. What distinguishes the two? Thanks,
you asked this on march 9th. Not the same thing. The big fundamental difference. I buy a stock for $10. I have a target price (fundamental value) of $15 on it, so i don’t sell until it nears or hits $15. However, some have an up from target and they set it in percentage terms. Maybe its 10%, 20%, 30%. In my previous example, if the up from target was 50% then these two methods would indeed be the same thing. you can do it in dollars as well, but that simply translates into a percentage. But they are not interchangeable.
Maybe we can use this as a “whats the difference” thread… From the equity section, What’s the difference between, long-short strategy with a futures contract, and alpa-beta separation?
I’d say that long-short strategy with a futures contract is a special instance of alpha-beta separation, and only if the futures contract makes the portfolio market neutral (and neutral to any other specified risk factors), since, presumably, a long-short strategy could still have some net beta exposure if the IPS permits it and the manager wants it.
Schweser Book 3/Page 143 states that Long-Short can eliminate expected systematic risk by employing pair trades in a market neutral strategy. Systematic risk can then be added through equity futures or ETF’s. Alpha-Beta Separation Approach appears to gain a systematic risk, while picking up additional alpha thru investining in active money managers. From my understanding: Long Short appears to eliminate systematic, while Alpha-Beta wants to gain?
> From my understanding: Long Short appears to > eliminate systematic, while Alpha-Beta wants to > gain? No, a long-short strategy does not want to eliminate systematic risk completely, a market neutral strategy does though. A long short strategy wants to have a net systematic risk exposure. At any rate, the long short wants to gain the systematic risk if it buys the futures contract. So how is that different from an alpa beta separation?
What’s the difference between alpha-beta and core satellite approach? I am confused. Because first I thought they are the same thing?
Or my understanding is that satellite still leave some beta in them?