Discuss, whether the event is exploitable by you to create a positive alpha for your portfolio. Outline a strategy that you will use to create the positive alpha. Explain why you are unable to create a positive alpha strategy.

Discussion Questions

You are an active fund manager. For each of the recent events given below discuss, whether the event is exploitable by you to create a positive alpha for your portfolio. If the event is exploitable, outline a strategy that you will use to create the positive alpha. For events that are not exploitable, explain why you are unable to create a positive alpha strategy. (5 marks per question) (suggested word limit 2000)
1. Retail traders aggressively buy ‘meme’ stocks targeting stocks short–sold by hedge funds.
2. Major governments in the world provide incentives for the use of hydrogen as a fuel.
3. Major fund management companies increase their allocations to Chinese equities.
4. Trading platforms such as Robinhood impose bans on individual traders trading memestocks.
5. The regulator decides to ban ALL analysts’ reports due to potential conflicts of interest.
6. Cybersecurity breaches become very common.
7. Major central banks permit investors to hold cryptocurrencies.
8. Major central banks of the world exit quantitative easing.