As an investor, one of the key challenges you face is managing risk and protecting your portfolio against potential losses. One way to do this is by using smart hedging strategies, which can help you to avoid the negative effects of a stock market crash.

You can visit our smart hedging strategies and see their performances.

Hedging is a risk management technique that involves taking offsetting positions in different assets or securities in order to reduce your exposure to potential losses. For example, if you are concerned about a potential decline in the stock market, you could use hedging strategies to protect your portfolio against losses.

One effective hedging strategy is to use put options, which give you the right to sell a stock at a predetermined price within a certain time frame. By purchasing put options on stocks in your portfolio, you can protect yourself against a potential decline in the stock market.

One of the potential downsides of using put options is that they can be expensive. The right to sell a stock at a predetermined price within a certain time frame comes with a cost, known as the premium. The premium is the price you pay for the put option, and it is typically determined by a variety of factors, including the underlying stock’s price, the strike price of the option, and the length of time until expiration.

Because put options are a form of insurance against a decline in the stock market, the premium can be expensive, especially if you are purchasing puts on a large number of stocks in your portfolio. This means that using puts to hedge against a crash in the market can potentially eat into your investment returns, which can make them less attractive for some investors.

Hedge by diversifying

By holding a mix of different assets, such as stocks, bonds, and commodities, you can help to reduce your overall risk and protect yourself against potential losses.

Check out our Universal Investment strategy as a good example.

Hedge by using safe heaven assets – Gold and Bonds

Hedging strategies using gold and Treasuries are investment strategies that involve using these two assets to reduce the risk of your portfolio. Gold and Treasuries are considered to be safe haven assets, which means that they are typically less volatile than stocks and are therefore less risky to invest in. By holding a mix of gold and Treasuries in your portfolio, you can potentially reduce your overall risk and protect yourself against potential losses.

One way to use gold and Treasuries as a hedging strategy is to allocate a certain percentage of your portfolio to each of these assets. For example, you might decide to allocate 10% of your portfolio to gold and 20% to Treasuries, with the remaining 70% invested in stocks.

Another way to use gold and Treasuries as a hedging strategy is to actively rotate between these assets based on market conditions. We call these “smart hedging strategies”. For example, if you are concerned about a potential decline in the stock market, you could increase your allocation to gold and Treasuries and reduce your allocation to stocks.

One of our smartest strategies is the Top 3 strategy. Find more details here.

You can find many ETF based rotational strategies and see the latest performances.