How do you do it? How can you hedge against the stock market if all you hae to invest in is stocks?
What do you mean? There are options to short the market and that allows you to hedge so you have both short and long positions.
Different asset classes tend to have different responses to the same stimulus. Something like COVID-19 that is likely to impact business performance sees investors move to asset classes regarded as lower risk, typically bonds and precious metals. Since the demand for these will increase, so will the price - so as stock markets sell and prices of equities fall, that same money moves into those other assets, and as demand increases, so does the price.
As noted above you also have the option to short stocks, which means youâll make money as prices fall.
Itâs called the All Weather Portfolio. First revealed in Tony Robbinâs Money: Master The Game book.
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On Freetrade?
No, sadly there are no options to short on Freetrade. There are short and medium (not long term as it says in the description which I have asked to be changed) US Treasury ETFs which offer a hedge against falling equity values (usually). There are also gold and silver ETFs. Those are being hammered lately but the same thing happened in 08 before a massive rally once positions had been covered.
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Reddit AMA with Ray Dalio:
The way I research and write is an iterative process in which I delve into the subject in various ways, write down what I think, triangulate it with the worldâs greatest experts who I ask to tear it apart or offer new ideas that I missed to stress test it, do more research, writing, and triangulating until I reach the point of diminishing returns. However, I never stop this process because I never adequately learn to satisfy my important curiosities.
What I read is typically those books and other sources of information which are written by brilliant experts in the areas that Iâm drawn to learn more about.
As far as how I schedule my time, I have a number of strategic objectives that I am unwaveringly on a path to accomplish and pursue in a highly variable way that is optimized for the tradeoffs that I spend at the moment.
More generally, I have a deep sense of responsibility to others who are partners in my pursuing my passions such as those I work with and our investors and their beneficiaries as I attempt to understand the world, the economy, and the markets, and then successfully bet on what they will do. Of course my family, my closest friends, and my other treasured relationships lead me to spend time in ways that are appropriate to them.
I do a lot and I love it and I benefit a lot from the help of others who provide leverage to me.
We are now in an era of the most massive MP3/helicopter money monetary stimulation since WWII. Please read about it in my âBig Debt Crisesâ book, which you can get for free at economicprinciples.org.
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So far I found what Ray Dalio says or does is of little value to individual investors like me. He invests primarily in macro-related asset classes like bonds, currencies and commodities and all kinds of fancy derivatives, only large institutions can trade them. He is not an equity investor really.
So listening to his thoughts on cycles and markets is indeed useful, but I can find little application in my real life.
Ray Dalio - cash is a bad idea, negative returns.
Mark Cuban - Iâm all about cash right now, yo.
Ray does have a way of explaining how things work - better than any Harvard Econ class online. He utilises his network that few/none of us have access to and spreads the knowledge via LinkedIn, Instagram and his sites.
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yeah I follow him on LinkedIn. Very wise man and full of wisdom and his principles. Just when he talks about economic machines, I got no idea how to apply that into day to day investing in stocks.