Portfolio protection and money management for the long term investor
This is meant to be a thread for the discussion of the methods by which an individual can protect his or her portfolio from market risk. If you feel you have bought only the strongest companies with great prospects but you have this nagging doubt about what will happen if the over all market tanks, then welcome. The use of the word "tank" does NOT refer necessarily to a crash or even a bear market -- though it does not exclude those events either -- but is intended to cover the more significant pull-backs that a stock/sector/market experiences from time to time. Let's talk about strategies to protect against such an event. I would like to explore the use Options, Futures, Indices and any other methods that people know of that can provide some insurance protection in the event of a market decline.
I do not view the employment of these strategies as being inherently contradictory to the long term, buy and hold approach. I wish I had been adequately hedged through this decline (March-April 2000) -- it would have given me the courage to add to my holdings on days when some stocks were being sold at fire-sale prices.
This is not a thread for short-term trades and/or speculative trading in options. There are other SI threads devoted to that subject. The primary objective here is first and foremost, capital preservation. A secondary objective is to permit an investor the comfort of knowing that existing positions are protected so that additional positions can be taken when there is a sharp market decline -- and to minimize the likelihood of an investor precipitously exiting positions during a significant decline.
About the only thing completely off-limits will be touting and rude or abusive postings.
I would not be averse to inviting posts on specific positions that people take at any juncture when they feel that there is a need to commence hedging. |
