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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Investor2 who wrote (12654)3/21/2000 7:23:00 PM
From: Mr. BSL   of 15132
 
Doesn't cash have an advantage over a hedge if the market really does tank?

All things being equal, cash has the advantage of paying interest. However, If you believe that the stocks / funds you own will outperform the general market and you believe that the general market is not currently supporting higher prices, then you would be better off with a hedge.

Lets say the market tanks 25% and your carefully selected stocks / funds only go down 15%. The profits from the hedge will overcome the losses from your holdings and the lost opportunity of interest.

Regards, Dick
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