ggamer, I am seeing that your concern has several aspects:
For the potential drop in your California home price, you might weigh puts on various California home builder stocks. I suspect you already have considered this. (I myself am long such stocks.)
For the potential job layoff, you might consider selling short or buying puts on your company's stock. Sometimes, in the past, layoff announcements have propelled the stock up though, so it might be relevant to initiate positions well before this, and hope that the stock declines as the public becomes aware of business difficulties. Still, I can't ever see myself recommending this tactic: Betting against one's company is so...ugly to me. Instead, perhaps consider buying puts against a competitor public company.
Since you say you've not a lot of money for shorting and you've no experience with puts, I'm not optimistic for your success in using puts effectively. Especially if we're talking making bets big enough to cover a $100,000 house price decline. (Obviously, jmo, I have no knowledge of anyone's luck, skill, knowledge. And since I don't do puts, my opinion is colored by that.)
I've known people who've tried variations on the "Texas technique". Sometimes that has worked out after much pain and time. I don't like such schemes. I'd never counsel anyone to make an investment knowing that one tactic is to seek bankruptcy while sheltering assets from creditor's clutches, or just walking away from a commitment.
The only way I've found to "hedge" in this situation (expensive home bought during booming housing market in iffy job market) is to bet on yourself. Protect your job situation by ensuring you have enough education (e.g. an MBA degree to fight off every other MBA) and enough training and enough networking to find comparable paying jobs.
You don't say much about your personal life. If this is your first home and you are concerned about home values, your job tenability, etc., well, welcome to the club. Your best course of action might actually be to do nothing and just plod on like the rest of us. We've made it so far, and you will too. If you are a heterosexual single guy, one good hedge for you would be to seek out and marry a woman with a good job!
All just my lurker's opinion. I'm no expert in ANY area discussed above (including marriage)
Paul Senior, who
has been wrong many, many times |
