Hedging my portfolio.

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How does one go about hedging a portfolio ? How would I find inverse stocks that are opposite to my mainstay stocks ? Is there a rule of which sectors inverse each other ? When one has a bad day the other has a good day ?

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Asked on April 14, 2022 10:12 am
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Hey Eric,

There are many ways to hedge a portfolio and it'll depend on what you are hedging against. For example, if you are just looking to hedge against a market sell off, then typically gold has proven to be a good hedge against uncertainty. Outside of that, it'll depend on what caused the selloff. The last 3 market crashes, COVID, '08 Financial Crisis and Dot.com bubble from the early 2000s all had different catalysts and in each case, a different sector outperformed - so its not as easy as it looks.

If however, you are looking to hedge against something specific like rising oil prices - while still complicated, it is easier to answer. With that in mind, what exactly are you looking to hedge against ?

Mat

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Posted by Mathieu Litalien
Answered on April 18, 2022 6:01 am