Average
people’s involvement in stock market is buying stocks (or taking
a long position), then hope the stocks go up, nothing else.
Since stocks never move in one direction (up) only, they go
other directions as well (down, sideways, or even to zero
sometimes), clearly the odds are overwhelmingly against average
people whose only strategy is conventional “Buy and Hold” (or
“Buy and Hope”). Like any other game, when odds are not in
player’s favor, it’s hard to win.
In order to placing odds in your favor, you must have strategies to profit from all market directions: up, down, sideways etc. Further, in addition to price movement, you must have strategies to profit from other aspects of the market: volatility, time etc. For details, contact us.
Most stock brokers/financial advisers especially those from big name firms are mutual fund sales people. Their main job is to sell their firms’ mutual funds to “gather assets” for their firms. They don’t have a clue about derivatives or derivatives markets. Their firms don’t want you to know other aspects of the market. Once they have control over your assets (in their mutual funds), they can and will profit from your assets or positions in derivatives markets (see media coverage on mutual fund scandal).
Simply put: hedging is risk control. “Hedging” reduces, but never increases market risks. If a trade or a position in the market does not reduce risk, it’s not hedging, it’s speculation. Money managers who truly hedge their positions should be able to present to clients the risk reduction in each position they take in a quantitative manner.
It is our belief that no one can predict the market! “Experts’ opinion about the market means absolutely nothing! Exposure to the market is highly risky, and therefore must be hedged by various hedging strategies.
