A Guide to Hedging for the Amateur Investor: Part II

A Guide to Hedging for the Amateur Investor: Part II
A screen displays trading information for stocks on the floor of the New York Stock Exchange (NYSE) in New York City on June 27, 2022. Brendan McDermid/Reuters
Gary Brode
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Commentary

I’ve been seeing a lot of important questions recently from amateur investors regarding some of the more advanced topics in the investing world. Many people have been taught about things like diversification and dollar cost averaging, but don’t really understand concepts like hedging, offsetting different kinds of risk, or shorting stocks. In my first article on this topic, I started to explain some of the basics of how to think about hedging, and explained concepts like market hedges and shorting stocks.

Gary Brode
Gary Brode
Author
Gary Brode has spent three decades in the hedge fund business. Most recently, he was Managing Partner and Senior Portfolio manager for Silver Arrow Investment Management, a concentrated long-only hedge fund with options-based hedging. In 2020, he launched Deep Knowledge Investing, a research firm that works with portfolio managers, RIAs, family offices, and individuals to help them earn higher returns in the equity portion of their portfolios. Mr. Brode’s work has been featured in the Wall Street Journal and Barron’s, and in appearances on CNBC, Bloomberg West, and RealVision.
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