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Ask HN: Hedging labor income risk in the financial markets
Layoffs at tech companies underscore that labor income is risky. A company is more likely to cut compensation and fire people when its stock price has fallen, and options and stock grants are worth less. If you work for a tech company, some ways to hedge labor income risk are to short the stock of the company, buy put options on the stock, or short or buy put options on a tech sector ETF such as XLK. (Higher-level employees may not be allowed to short the stock of their company. Can junior employees do so?) There are 11 Sector SPDR ETFs. Instead of buying SPY, which tracks the S&P 500 and owns all sectors, you could buy all except XLK.
Has anyone tried to hedge career risk in the financial markets? If so, what instruments did you use, and how did you determine sizing?
- smt88 4y agoJust save a percentage of your paycheck in broad ETFs. In the US, you can dip into retirement funds if you lose your job.
- Bostonian 4y agoIn April of this year, tech represented 28% of the S&P 500 https://www.bloomberg.com/news/articles/2022-04-01/s-p-500-tweaks-to-cut-tech-s-weight-as-payment-firms-move-sector https://www.bloomberg.com/news/articles/2022-04-01/s-p-500-t.... It's not ideal for someone who works in tech to have substantial additional tech exposure in his or her investments.
- smt88 4y agoMost ETFs aren't significant tech exposure. Pick a health care or energy or whatever ETF.