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A hedge is a financial instrument that is negatively correlated with an exposure. A hedge position is not supposed to have a positive return, it's supposed to

by lottin 3y ago

A hedge is a financial instrument that is negatively correlated with an exposure. A hedge position is not supposed to have a positive return, it's supposed to offset another position, so that the combined return of both positions is zero, or close to zero. You're using financial jargon in an attempt to sound clever, but you only sound like somebody who doesn't know what they're talking about.

OrvalWintermute 3y ago
> You're using financial jargon in an attempt to sound clever, but you only sound like somebody who doesn't know what they're talking about. Stop with the snark, you're violating the rules. > Hedge defined "To hedge, in finance, is to take an offsetting position in an asset or investment that reduces the price risk of an existing position. A hedge is therefore a trade that is made with the purpose of reducing the risk of adverse price movements in another asset. Normally, a hedge consists of taking the opposite position in a related security or in a derivative security based on the asset to be hedged." https://www.investopedia.com/terms/h/hedge.asp https://www.investopedia.com/terms/h/hedge.asp > "What Are the Advantages of Buying Gold Over Treasuries? Gold is popular among investors because it can be used as a hedge against currency devaluation, inflation, or deflation. It’s also liked for its ability to provide a safe haven during times of economic uncertainty. When it comes to gold and taxes, depending on your income level, Treasury investments are typically more favorable tax-wise." https://www.investopedia.com/articles/investing/092514/better-inflation-hedge-gold-or-treasuries.asp https://www.investopedia.com/articles/investing/092514/bette... I have hedged my heavy US bond & US Treasury & US stock positions & US dollar positions with another asset class. My hedge is producing outsized returns is the anecdotal observation.
- lottin 3y ago
  > I have hedged my heavy US bond & US Treasury & US stock positions & US dollar positions with another asset class. No, you just have a portfolio that consists of a bunch of random assets.
  - OrvalWintermute 3y ago
    > No, you just have a portfolio that consists of a bunch of random assets. No, I have a diversified portfolio that consists of 5 asset classes divided into percentages that match my risk appetite. While I am regularly in derivatives too, currently I am not for some specific reasons.
    - lottin 3y ago
      What is your risk appetite? How does gold affect the risk profile of your portfolio, specifically in terms of volatility and value-at-risk, and also more generally?

by lottin 3y ago

OrvalWintermute 3y ago

> You're using financial jargon in an attempt to sound clever, but you only sound like somebody who doesn't know what they're talking about. Stop with the snark, you're violating the rules. > Hedge defined "To hedge, in finance, is to take an offsetting position in an asset or investment that reduces the price risk of an existing position. A hedge is therefore a trade that is made with the purpose of reducing the risk of adverse price movements in another asset. Normally, a hedge consists of taking the opposite position in a related security or in a derivative security based on the asset to be hedged." https://www.investopedia.com/terms/h/hedge.asp https://www.investopedia.com/terms/h/hedge.asp > "What Are the Advantages of Buying Gold Over Treasuries? Gold is popular among investors because it can be used as a hedge against currency devaluation, inflation, or deflation. It’s also liked for its ability to provide a safe haven during times of economic uncertainty. When it comes to gold and taxes, depending on your income level, Treasury investments are typically more favorable tax-wise." https://www.investopedia.com/articles/investing/092514/better-inflation-hedge-gold-or-treasuries.asp https://www.investopedia.com/articles/investing/092514/bette... I have hedged my heavy US bond & US Treasury & US stock positions & US dollar positions with another asset class. My hedge is producing outsized returns is the anecdotal observation.

lottin 3y ago
> I have hedged my heavy US bond & US Treasury & US stock positions & US dollar positions with another asset class. No, you just have a portfolio that consists of a bunch of random assets.
- OrvalWintermute 3y ago
  > No, you just have a portfolio that consists of a bunch of random assets. No, I have a diversified portfolio that consists of 5 asset classes divided into percentages that match my risk appetite. While I am regularly in derivatives too, currently I am not for some specific reasons.
  - lottin 3y ago
    What is your risk appetite? How does gold affect the risk profile of your portfolio, specifically in terms of volatility and value-at-risk, and also more generally?