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David Einhorn: What’s Driving Investment Sentiment?

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10th annual GIBI investment symposium

Many prominent investors, fund managers, and market leaders gathered at the 2016 Great Investors’ Best Ideas (or GIBI) investment symposium in Dallas on Tuesday, October 18, 2016. Some of the prominent names included David Einhorn, Mario Gabelli, Ray Nixon, T. Boone Pickens, and Michael Price.

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David Einhorn’s views

David Einhorn, president of Greenlight Capital, spoke about investment strategies, stock selection, and monetary policy at the symposium. He said, “passive money management strategies are fundamentally momentum strategies.” In other words, when the stock performs well and delivers a good return, its weight in the index (QQQ) (SPY) increases. Stocks that don’t do well see their weight in the index (VFINX) (VOO) (IWM) fall and are sometimes replaced with stocks that are doing well.

Einhorn indicates that when there is a momentum-oriented market, the passive fund management strategy does well. When there is a different scenario, the active fund management strategy does well.

The Fed’s dovish stance is one of the major factors that has supported market movement. However, there are some uncertainties in the upcoming months like the US presidential election in November and the Fed’s rate hike decision in December. Ahead of these events, we’ll likely see increased volatility in the market.

Einhorn also said that in the present scenario, some stocks are very expensive while some stocks are extremely cheap. In this series, we’ll discuss the stocks that David Einhorn recommends.

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