As you know, the sophistication of hedging is strictly for market downturn. In futures, you do straddle. In equity, you use options. But if you are too smart, then you can dream up all kinds of hedging ways based on price performance of any item in any market. Charting is extremely important in hedging. Unfortunately, some markets are too small to perform for you; if you are a big fish in a small pond.
Last few years hedge funds were out of fashion. They were in fashion when the economy was in malaise. Many of them closed shop and/or changed their strategy. It is primarily because the economy is planned(obsolescence and replacement theory) to grow without business cycles. So, the insurance, you have to pay for the act of hedging, becomes overly burdensome.
The latest fad, of course, is lowering the cost of equity, by stock splitting. the growth in economy then proceed to give the stock a nice move. Buy stock that splits often is a way to hedge your portfolio. Those stocks also have tremendous, marvelous and stupendous fundamentals. The minute you see the stock, you would fall in love. Unfortunately, there are too many of them. INTC, GE, SYMM, and many many more; all of them are great stocks. |
