Why 'Equity Market Neutral' Is Total Nonsense

In the hedge fund industry, there are some frankly detestable phrases.  Particularly in the context of equity investing.  The loathsome phrases uniformly seem more marketing-driven by alternatives managers than investment-solution-oriented for investors. For me, ‘Market Neutral’ is at the top of the loathsome list, joined by other older phrases such as ‘Absolute Return’.  Another older phrase ‘Portable Alpha’ has thankfully died a violent death, but been replaced by the new flavor-of-the-year misnomer ‘Alternative Beta’. The problem with the loathsome phrases is people actually start to believe them—Market Neutral and Absolute Return mean you can’t lose money, right?  Wrong, with a capital W--hedge funds can both make money and lose money, as has been demonstrated numerous times.