What is Market Neutral Investing?
Market neutral investing is a strategy undertaken by an investor or an investment manager that seeks to profit from both increasing and decreasing prices in a single or numerous markets. Market neutral strategies are often attained by taking matching long and short positions in different stocks to increase the return from making good stock selections and decreasing the return from broad market movements.
How an amateur investor beat Wall Street’s top experts by 245%
Market neutral investing is the brainchild of an Australian amateur investor named Alfred Winslow Jones.
Back in 1948, Jones was working for Fortune magazine. And he was working on a story about how Wall Street’s best and brightest picked winning stocks.
Well, after interviewing the “best and brightest”, Jones came to a startling conclusion: none of them had the slightest idea what they were doing. In fact, one so-called expert actually based his stock picks on the outcome of the annual Harvard-Yale football game.
Now, Jones wasn’t a financial wizard. But he was very well educated. In fact, he’d graduated from Harvard University, and he earned a PhD in sociology at Columbia.
As you may know, sociology relies heavily on statistics. So instead of following in the footsteps of Wall Street’s “best and brightest”, Jones used his statistical knowledge to create a unique investment strategy. And the results were amazing you see, starting with an investment of $100,000 in 1949, Jones amassed a fortune of $4,900,000 by 1966. Yes, that’s correct—$4,900,000—49 times his initial investment.
During those 17 years, he made an astounding average return of 27% per year—while the market returned just 11%. Amazingly, this amateur investor beat the market by a nearly 2.5 to 1 margin for almost two decades.
In fact, Jones’ performance was so impressive that his former employer, Fortune Magazine, wrote an article about him in 1966. The title? “The Jones Nobody Keeps Up With”.
The faster, safer way to rebuild your retirement dreams
Today, this type of strategy is used by billionaires like James Packer and Frank Lowy. And it’s also used by the world’s wealthiest families and major institutional investors like Yale University Endowment.
But don’t worry. This strategy isn’t just for billionaire investors and elite fund managers any more. It’s now available for those who manage their own super, as you'll discover in the Product Disclosure Statement.