Hedging

  • 21 Nov
    Worried About The Current Financial Environment? Here’s What You Need To Know

    Worried About The Current Financial Environment? Here’s What You Need To Know

    • Today, we’ll discuss the sustainability of developed financial systems as they are now.
    • We’ll also take a look at the much talked about Chinese slowdown.
    • I’ll finish with a take on gold and what could happen.



    Introduction

    In today’s article, I’ll discuss the financial environment we are living in.

    It’s very important to see the fundamental trends and forces surrounding what looks like a stable and strong financial system. The fundamental forces are crucial because in the long term, those forces eventually prevail and have a huge impact on all financial assets. More →

  • 20 Oct
    Now’s The Time To Consider These 7 Hedging Strategies

    Now’s The Time To Consider These 7 Hedging Strategies

    • A hedge is like any other investment. Whether it’s good or bad depends on the price.
    • I’ll discuss 7 unconventional strategies that will give you some food for thought.
    • The best hedge is the free hedge. By looking deep enough, it’s possible to find it.



    Introduction

    Hedging is a very important, but an often-omitted investing strategy.

    The principle of hedging is to own something that will go the opposite direction of everything else in the case of a market crash, protecting your portfolio from potential losses. For example, if you own an S&P 500 portfolio, buying a put option on the S&P 500 gives you security in the event that the market falls as you won’t lose anything as the value of the put option should appreciate at the same rate the S&P 500 declines. More →

  • 03 Oct
    Good Debt Explained: Why You May Want To Take Out A Loan To Invest

    Good Debt Explained: Why You May Want To Take Out A Loan To Invest



    • Investing isn’t only about choosing the right stocks, it’s also about proper capital allocation.
    • Taking on leverage to invest can be smart but it can also be incredibly dumb.
    • From an historical perspective, it could be a very smart thing to be ready to refinance your home and invest in stocks.

    Introduction

    Buffett and Munger praise themselves for never taking out loans for Berkshire and one of the most famous Buffett quotes is:

    “If you’re smart you don’t need debt, if you are not smart, you better stay far from debt.”

    However, this is another half-truth that he tells the world. More →

  • 26 Sep
    The Best Strategies For Investing Late In The Economic Cycle

    The Best Strategies For Investing Late In The Economic Cycle

    • What has to be done in the late part of the economic cycle isn’t a secret. I’ll describe the how and what.
    • However, as always in investing, the question is why we aren’t doing the rational thing.
    • I’ll ask you a question that will help you answer how much and whether you should rebalance.

    Introduction

    Yesterday, we discussed how the economy is in the late part of the economic cycle and everything is leading toward a recession.

    No one knows exactly when the next recession will start or what the trigger will be. So the only thing to do is to be prepared. More →

  • 31 May
    An Analysis Of The Top 10 Gold Miners

    An Analysis Of The Top 10 Gold Miners

    • Each gold miner is different, so you have to carefully pick the right one for your portfolio.
    • Debt levels, gold reserves, mining costs, political and environmental risks, all have to be put into a perspective related to your risk appetite, strategy, and investment horizon.

    Introduction

    Yesterday, we discussed the reasons it’s a good idea to have gold miners in your portfolio now. The goal of today’s article is to show you just how different gold miners are and how carefully you have to chose those to include in your portfolio.

    Just as every mine is different, each miner is even more different. There are huge differences in potential future output, mining costs, debt structures, political risks, etc. All of these factors have to be assessed to provide you with the best hedging option for your portfolio according to your risk appetite and portfolio orientation.

    In this article, I’ll discuss the top 10 holdings of the iShares MSCI Global Gold Miners ETF (NYSEARCA: RING) to give you insights into what to watch for and how that affects the risks and potential rewards for your portfolio. More →

  • 30 May
    Why You Want Gold Miners In Your Portfolio Now

    Why You Want Gold Miners In Your Portfolio Now

    • Investing 5% of your portfolio in gold miners offers you the potential for a twenty-fold upside while the downside is just the invested 5%.
    • A macroeconomic analysis shows that there is a high chance that the FED won’t be able to significantly increase interest rates or trim its balance sheet.
    • More quantitative easing—similar to what is still going on in Europe and Japan—would easily bring gold above $2,000 per ounce. In that case, I wouldn’t exclude 1,000% jumps for miners.

    Introduction

    Lately I’ve been mentioning in a few articles how gold, especially gold miners, are a good hedge for a portfolio. My idea is that if you own gold miners with 5% of your portfolio, you are relatively well protected against whatever surprises we might see coming from the economy. More →

  • 23 May
    Portfolio Management & Trading – The Value Investing Way

    Portfolio Management & Trading – The Value Investing Way

    • A value investor should trade when a better bargain present itself.
    • Liquidity is a key component of an investment and of a portfolio.
    • Klarman’s advice is to stay in touch with the market to find opportunities, average down, and hold ten to fifteen stocks max for proper diversification.

    Introduction

    We’ll continue with the analysis of Seth Klarman’s book Margin of Safety. Today we’ll discuss chapter 13, Portfolio Management and Trading. More →