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If you bought the S&P with 50% and held the rest of your money in assets that don't fluctuate alongside the market or hedged, you can buy the S&P at the low and
by marketgod 8y ago
If you bought the S&P with 50% and held the rest of your money in assets that don't fluctuate alongside the market or hedged, you can buy the S&P at the low and it always recovers.
Others keep their portfolio completely hedged so when there is a dip they can buy the swing.
- StriverGuy 8y agoI agree with the sentiment but you have to be careful about just assuming assets that are uncorrelated will remain uncorrelated in a black swan event. Additionally, you have to assume that your hedge is liquid enough that it can be rolled off in times of need.
- marketgod 8y agoI am not a mathematician or I would be able to do this better. Basically you can buy calls and puts to simplify it. This way a shift upwards/downwards will cause your options to shift inversely. You end up being liquid in that event and can continue to switch your position to the short side or long side. I however only buy options based on my sentiment of the market, bear or bull. Currently it's a bull market, S&P going to $300. Edit: Fixed buy calls and puts.