Analysts are looking for high risk adjusted returns, bottom line.  Returns are all that matters in the investment world, you don’t get any bonus points for having taken on more risk.  All analysts are in search of the lowest risk situation at any point in the investment world.

An analyst’s job is not be able to solve complex macroeconomic puzzles or to forecast the economy correctly, but rather let the macro framework serve as a guide to make money one company at a time.  Regardless of the market environment, hedge funds are looking to make highly attractive absolute annual returns.

There are many opportunities to look for on the short side: finding stocks whose profits are driven by only three more years of patent exclusivity, only two more year of below market oil hedges, or only one more year of an usually low rate due to prior NOLs (net operating loses).