Personal Finance & Money Stack Exchange
Personal Finance & Money Stack Exchange

Questions tagged [hedging]

for questions that relate to hedging. A hedge is an investment position intended to offset potential losses/gains.

A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment. In simple language, a hedge is used to reduce any substantial losses/gains suffered by an individual or an organization.

A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, many types of over-the-counter and derivative products, and futures contracts.

Public futures markets were established in the 19th century to allow transparent, standardized, and efficient hedging of agricultural commodity prices; they have since expanded to include futures contracts for hedging the values of energy, precious metals, foreign currency, and interest rate fluctuations.

Hedge (finance) - From Wikipedia

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Are you preparing for a possible dollar (USD) collapse? (How?)

After the last crisis it was easy for many to look back and say all the signs were there to indicate an impending crisis. Super-low interest rates from the FED, no down-payment loans, interest-only loans, under qualified borrowers, flipping of…
Muro
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Hedging vs just betting less

This is a question from a layperson about the fundamental concept of hedging, with regards to investing, gambling, and any situation in which hedging is used to manage risk. I do not understand why hedges are used as a risk management tool. Could…
David Kennell
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Can I hedge my household expenses using the financial markets?

Apparently farmers can hedge against high raw material prices and low crop prices by using financial instruments such as forwards and futures. Can I use financial instruments to similarly hedge my household expenses against unfavorable prices? A…
Flux
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What is the difference between hedging and diversification? How does each reduce risk?

Hedging and diversification are both used for reducing financial risks, but what are the exact differences between these two?
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What is the best way to invest in gold as a hedge against inflation without having to hold physical gold?

What is the best way to invest in gold as a hedge against inflation without having to hold physical gold? Is it possible for a regular person to just purchase shares in GLD?
D R
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Options revisited: Gold fever

In my recent question, I asked how to operate with options. Now I would like to see whether I learned anything. At this moment, Gold is rising. Fast. As I see it, in the future, the gold price has to come down (just like houses peaked and then…
GUI Junkie
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How do euro hedged index funds work?

I was trying to find a S&P 500 tracking fund and came across this one. db x-trackers S&P 500 Euro Hedged Index UCITS ETF. Can anyone explain what the Euro hedging means and how it is supposed to work? From what I understand hedging means protecting…
Roberto Fugazza
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Is gold really an investment or just a hedge against inflation?

As per the title of this question, is gold something that can really be considered an investment or is it just a useful hedge against inflation? While I can understand the value in having hedges against inflation, I'm at a bit of a loss over the…
anonymous
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Should I "hedge" my IRA portfolio with a life cycle / target date mutual fund?

I'm fully contributing to my Roth IRA every year into a brokerage account that is 100% in mutual funds. I've done basic mutual fund research and picked about 5 different funds that match what would be considered an appropriate allocation for where I…
Mike
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Where should I invest to hedge against the stock market going down?

Let's say that the stock market falls in value for whatever reason. Maybe a bank or two goes out of business, for example, and stocks fall 20-30%. What would you invest in if you were sure this was going to happen? Precious metals is one thing that…
Colen
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How can one hedge against property price change when buying a home?

Let's say I want to buy a home, with intent to sell it down the road ( < 10 years). If I want to minimize my exposure to market fluctuation, what would be the best way to accomplish that? I guess buying a put option on a REIT index or something…
Enno Shioji
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What is the best way to stay risk neutral when buying a house with a mortgage?

I'm looking to buy a property. I do not want to take a risk on this property. Its sole purpose is to provide me with a place to live. How would I go about hedging against increasing interest rates, to counter the increasing mortgage costs? Ideally…
newlogic
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What is the difference between these 2 S&P500 tracking iShare ETFs?

Relevance of the following discussion How can a investor from the UK invest in the S&P500 without being exposed to currency risk? There are at least the following two low cost ETFs. If I had only seen one of them (or rather if only one existed) I…
cmhteixeira
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Is short selling a good hedging strategy during overzealous market conditions?

As the stock market keeps increasing, I'm more and more interested in short selling as a strategy to hedge risk and make some money. History has shown that anything that goes up, must come down. The historical mean P/E ratio of the S&P is 16, and…
Christian
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What is the opposite of a hedge?

As an example of what I mean, when you buy a stock but are afraid that it might go down, you "hedge" your bet. What is the opposite of a hedge? In other words, what do you do if you are convinced it will go up in value and you want to profit from…
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