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Long investing

Long investing refers to a positive holding of something. It is the opposite of short investing. A portfolio that does not take short positions is referred to as a “traditional long only” strategy. In this model, if you do not like a stock you either don’t own it, or, if that is too risky, you underweight it (own less of it).

For example, in a ten stock portfolio , where the neutral weighting is 10%, a 12% position A would be 2% overweight. Another holding B of of 8% is deemed to be underweight.

If Stock A goes up by more than the neutral weighting, its contribution is said to be positive. If underweight holding B falls, the position has fallen less far than the neutral weighting.

However, most long-only portfolios are invested relative to stocks’ weightings in a benchmark.

Net long refers to a portfolio that, on balance – adding up the long positions and deducting the short positions – still has a positive exposure to the group of assets that the portfolio is invested in.


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