How to Hedge Your Portfolio
Recently, the media has focused significant attention on whether a market correction is in the near future, given the six year streak to market highs. Do you have a strategy in place if the market has a correction? Now may be a good time to rethink your investment strategy, more specifically, how to hedge your risk in the current market conditions.
Some things to consider as you develop a strategy would be:
- Identifying if your risk comfort level matches what you could potentially lose in your portfolio
- Adopting a buy low, sell high approach
In the past, bonds helped hedge against market risk, however, with bond values at historical highs, they no longer offer the kind of protection they once did. In my opinion, your best hedge against interest rate risk and equity risk is cash. When the market is down, cash allows you the flexibility to buy low and enter into those markets at a discount and then when the market goes up, cash allows you to re-balance and sell high.
This is one of the strategies we use in our firm. If you would like to have a portfolio review and speak with one of our financial advisors, you are welcome to gi
ve our office a call (775) 853-9033.