- A hedge is like any other investment. Whether it’s good or bad depends on the price.
- I’ll discuss 7 unconventional strategies that will give you some food for thought.
- The best hedge is the free hedge. By looking deep enough, it’s possible to find it.
Hedging is a very important, but an often-omitted investing strategy.
The principle of hedging is to own something that will go the opposite direction of everything else in the case of a market crash, protecting your portfolio from potential losses. For example, if you own an S&P 500 portfolio, buying a put option on the S&P 500 gives you security in the event that the market falls as you won’t lose anything as the value of the put option should appreciate at the same rate the S&P 500 declines. More →