Picking sectors to go long and short
Question
Which sector would you buy and which would you sell short right now?
Short answer
Frame it as a relative-value view. Tie each side to the macro backdrop (rates, growth, inflation, regulation) and to valuations and earnings trends, explain why the pair hedges broad market risk, and name the risks to the trade. A clear thesis with reasons beats a vague answer.
Adapted from Crack, Heard on the Street, Q5.3.15, p.51; question and answer rewritten by SelfMadeQuant.com.
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