Question: Portfolio Managers

Comment on Portfolio Managers

Why D is not a correct answer? I think it is the same as B in the meaning, couldn't catch the difference between them
gmat-admin's picture

The argument suggests that, if portfolio managers are prevented from engaging in ONE specific activity (short selling), then those managers cannot provide above average returns.

For this to be a valid argument, it must be the case that short-selling is a definite requirement for providing above average returns. In other words, there's nothing else a portfolio manager can do (other than engaging in short-selling) to provide above average returns.

Answer choice B says exactly this.

Answer choice D says that short-selling has been used in the past to provide above-average returns. but it doesn't say that portfolio managers have no other strategies (beyond short-selling) that will yield above-average returns.

Hi Brent, I tried to enlist as many assumptions as I could for the question which are:
1. Above avg returns only by SS
2. Same Managers
3. Same economic evironment
4. No other factor affected fall in returns

I know that these many assumptions are not required but just wanted to know that are these assumptions correct?
gmat-admin's picture

Hi Kamakshi,

Assumptions 1 and 4 look good.
I'm not sure what you mean with assumptions 2 and 3.

Aside: You can test the validity of each assumption by applying the Negation Technique.

By assumption 2, I mean that the managers that were there before the new rule still remain i.e. there is no change in skillset
And by assumption 3, I mean that there is no sudden change in economic environment, which might otherwise affect the returns
gmat-admin's picture

Thanks for the clarification. Yes, I think those are valid assumptions.

Good day Brent, Please can you assist to further provide clarification on the Negation Technique. I actually struggle to use the negated statement to determine my answers.
gmat-admin's picture

The best way to understand the mechanics of the negation technique is to see this strategy in action.
Here are a few questions to get you going (you'll see that I have provided a detailed solution to each question):





I hope that helps.


Many thanks, I will go through the links.

Hi Brent, to clarify with Assumption question, are we attacking conclusion or premises? It seems in all above question links that you provided is attacking conclusion. However in the Assumption video is attack premises?

Also are we meant to strengthen or weaken as it seems to strengthen when answer choices have no negative words and to weaken when there is negative words in the answer choices?
gmat-admin's picture

Are you referring to the Negation Technique?
If so, I think it's best to look for the answer choice that, when negated, destroys the ARGUMENT (i.e., how well the conclusion follows from the premises).
This means we can attack the premises, conclusion or both.

That clarify all my confusion now then, thanks Brent.

In order to use the Negation Technique I prefer adding NOT to the assumption main verb. Otherwise, doing it your way "it is not the case that ..." somehow makes it more difficult to me.
Said that, I have a problem regarding my approach. What should I do if the assumption has a "never" or a "often" in it, Would you change the "never" for "always"?
gmat-admin's picture

Great questions.

NEVER is the same as "zero times"
So, the negation of NEVER is "NOT zero times"
"NOT zero times" is the same as "At least one time"
So, if we take the premise "Joe has NEVER bathed" and negate it, we get: "Joe has bathed at least once"

OFTEN, on the other hand, doesn't have a precise negation.
I'd say the negation of OFTEN is NOT OFTEN


Hi Brent, I thought we should avoid word such as "only" in GMAT, as it is too extrem? Thanks x
gmat-admin's picture

You're correct to say that ONLY is an extreme word, but this doesn't mean it's never correct.

The Argument states something for "ALL" Managers ,but concludes related to "One" Manager , thus Option D stating short-selling as one of the techniques reflects it might be correct ,can you please explain on that part
gmat-admin's picture

You're right to say that the new rules apply to ALL portfolio managers. However, the fact that only one manager made a conclusion has no bearing. We're asked to find a necessary assumption for that conclusion, so it makes no difference how many people made that conclusion.

As for answer choice D: If we NEGATE this answer choice, we get: Portfolio managers do NOT often use short selling techniques to provide above-average returns for corporate clients." Does this negated assumption destroy the argument that the new rules prevent managers from making big money for their corporate clients? No it does not. If anything it helps the argument by suggesting that portfolio managers have other ways to generate above-average returns for corporate clients.

Does that help?

Thanks it was helpful.

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