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"how would everyday investors protect themselves from a potential market crash??" It's tough to predict market crashes. Investors who fear a crash can reduce s
by Bostonian 5y ago
"how would everyday investors protect themselves from a potential market crash??"
It's tough to predict market crashes. Investors who fear a crash can reduce stock exposure, especially in tax-deferred accounts where they don't need to worry about the tax consequences of realizing capital gains.
- Hedgemaster 5y ago1. It's indeed not a trivial task to time a market crash. However, most recent crashes consisted out of series of crashes. So that fact would give retail investors some time to buy protection in terms of put options for example. 2. The approach you suggested would expose everyday investors to 2 risks: losing part of their savings and restricting their upside by cutting their positions. What could be an alternative way is to keep all their equity positions and write out-of-the-money covered calls, so they could collect the premium. And there are many more ways investors could hedge their risks with options. Just in case: it was NOT a financial advise :)