Understanding the differences between long and short investing
1 September 2016 | Invesco
As part of the launch of our new Long-Short Australian equity fund, we provide this educational article on the differences between buying long and short-selling in equities investing.
Traditional investing in the stock market is based on the concept of buying low and selling high: An investor purchases a stock for a reasonable price, hoping that the company will be successful and the price of the stock will rise. But what if you think the company’s stock price is higher than it should be? Can you still profit? By using an investment strategy called short-selling, investors can 'short' a stock in the hope that the price will drop. Investors can short-sell individual stocks themselves, or they can purchase a mutual fund that uses this technique.