Posted 3/31/2024, 9:00:00 AM
With Market at Record Highs, Investors Advised to Hedge Bets
- Stock market is at all-time highs, so now is a good time to hedge against potential downside risk
- Risks include high valuations, concentration in mega cap stocks, high interest rates threatening economy, sticky inflation, and geopolitical tensions
- 4 hedging strategies sell a portion to lock in profits, buy the VIX which is historically cheap, buy put options on indices which are cheap, write call options to earn premium
- Other risks technical measures show market is overextended, risks have existed for months but market has surged anyway
- Consider buying protection given risks and relatively low cost of hedges like the VIX and index puts