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Leslie Budd on... hedge funds

Updated Thursday 10th June 2010

How does a football manager of a World Cup team decide when to play their best players? Leslie Budd looks at long-term and short-term investments.

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Copyright The Open University


Copyright The Open University


English football was once famous for its long ball game, but international influence has made it a much shorter one.  Well business is a bit like football, in which the short has tended to dominate the long.  But in successful business, you need both.  For hedge funds, they seek to balance short-term investment positions with long ones.  But if they only focus on one and not on both there’s a danger they move from hedging to speculation.  Mining has been in the forefront of this game for centuries.

How do you balance investment in very long-term projects in new resources against the demands of shareholders for short-term profits?  How do you balance growth by acquisition against the playing new technologies?  These questions are not so different from those faced by the managers of World Cup teams.  Do they keep back their best players for later stages of the tournament or do they play them now?

That’s my view. You can join the debate with The Open University.





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