Yes or No:"Fully hedged portfolios are not risk free"?

Interesting..now lets take another example, where you are long 20 stocks and short another 20 stocks and your dollar exposure to both sides is the same...How do such portfolios react to a sharp broad intraday directional market move, as in 1987 or March 2000 or Jan 2003? Are those usually really good days or really bad days for such market neutral portfolios, or just breakeven days? any real life experiences?
 
I don't understand this: "I am now fully hedged"
http://www.elitetrader.com/vb/showthread.php?s=&threadid=78305

Quote from OddTrader:

Q

I managed to sell $750 million worth of yen short before it broke. When the DM failed to resist the rise in the dollar, I reduced my DM position to $750 million. I am now fully hedged, long in DM and short in yen. I did not make any money on the maneuver, but I avoid giving back my profits.

--- The Alchemy of Finance, George Soros, page 271

UQ

Your exploration/ discussion/ input on the above would be appreciated.
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even if you make a perfect hedge u cannot possibly know the basis (physical price - futures price) at the end of your trade. So there is always uncertainty/risk in a hedge due to basis risk.

In regards to options u can never construct a truly delta neutral hedge over an extended period of time incorporating big market moves
 
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