Posted in Finance, Accounting and Economics Terms, Total Reads: 333
A gunslinger is an aggressive portfolio manager who uses high risk investment techniques to get maximum returns. These traders look for an expected acceleration in the stock prices, earnings or revenue. They take an aggressive position to benefit from sharp movements in the market. They use leverage and margin to increase their returns.
They are more interested in the stock’s price momentum than in the company’s long term value. So they rarely hold on to a stock for an extended period. They are very active in the stock markets and always keep a constant check on the price trends. Gunslingers tend to make high profits in the bull market, but their losses are above average in the bear markets. This risk taking may result in high rewards some times, but overall portfolios losses often outweigh the gains. That also causes much stress to the portfolio’s owners. Many investors do not have the risk tolerance to watch a gunslinger manage the whole of their portfolio. Investors often put a percentage of their risk capital into a fund run by a gunslinger, such that their losses are controlled.
Example : A gunslinger is likely to invest in the IPO (Initial Public Offering) of a new company with a new and innovative product, rather than a secured bond issued by a well known company.