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HomeBlogsProtect Your Investments: Top 5 Hedges to Preserve Market Gains.

Protect Your Investments: Top 5 Hedges to Preserve Market Gains.

Protect Your Investments as Bulls are expected to continue on major stock markets this summer due to strong corporate earnings and tame inflation. The S&P 500 has advanced over 26% and 86% since 2020, respectively.

Retirement investors can lock in long-term gains with hedges, preserving their accumulated gains without compromising opportunity. A qualified investment advisor can help with five simple strategies for hedging.

Diversification in Investments

  • Limits concentrated risk and exposes portfolio to opportunities.
  • Equity markets often move in different directions.
  • Example: S&P 500 IT sector’s 25% annualized return, MSCI Emerging Markets Index’s flat performance.

Asset Allocation Opportunities

  • Higher interest rates present a new opportunity in fixed-income investments.
  • This presents a safe haven for investors accustomed to equity market fluctuations.
  • As major stock markets reach new highs, gains can be shifted to a fixed-income portfolio of bonds and guaranteed investment certificates.
  • Allocation to fixed income depends on individual investor’s age and retirement cash needs.

Writing Covered Calls in Derivative Market

  • Provides safe income through writing covered calls on existing stocks.
  • Gives buyer legal right to buy shares at a set price.
  • If stock rises above strike price, owner sells at higher price.
  • Writer retains stock, dividends, and buyer premium if stock remains below strike price.
  • Permitted in RRSP and TFSA.

Short Selling Strategy Overview

  • Balances a ‘long’ portfolio to generate returns during downturns in equity markets.
  • Involves borrowing securities, selling them on the open market, and buying them back at a future date.
  • Risky and typically for experienced traders.
  • Long/short mutual funds can assist in balancing.
  • Investors can also take short positions through ‘bear’ ETFs for various indexes, commodities, or sectors.

Trailing Stop-Loss in Portfolio Management

  • Conditional orders on equities can lock in gains as the investment increases.
  • Basic stop-loss is a pre-set price below the current price that triggers a sell order if it falls.
  • Trailing stop resets the stop as the stock rises, locking in bigger gains.
  • Losses are capped at $2 per share if a stock is purchased at $8 with a stop-loss at $8.

Must read book about investing – check here

Protect Your Investments as Bulls are expected to continue on major stock markets this summer due to strong corporate earnings and tame inflation. The S&P 500 has advanced over 26% and 86% since 2020, respectively.Retirement investors can lock in long-term gains with hedges, preserving their accumulated gains without compromising opportunity. A qualified investment advisor can help with five simple strategies for hedging.

Protect Your Investments as Bulls are expected to continue on major stock markets this summer due to strong corporate earnings and tame inflation. The S&P 500 has advanced over 26% and 86% since 2020, respectively.Retirement investors can lock in long-term gains with hedges, preserving their accumulated gains without compromising opportunity. A qualified investment advisor can help with five simple strategies for hedging.

Protect Your Investments as Bulls are expected to continue on major stock markets this summer due to strong corporate earnings and tame inflation. The S&P 500 has advanced over 26% and 86% since 2020, respectively.Retirement investors can lock in long-term gains with hedges, preserving their accumulated gains without compromising opportunity. A qualified investment advisor can help with five simple strategies for hedging.

Protect Your Investments as Bulls are expected to continue on major stock markets this summer due to strong corporate earnings and tame inflation. The S&P 500 has advanced over 26% and 86% since 2020, respectively.Retirement investors can lock in long-term gains with hedges, preserving their accumulated gains without compromising opportunity. A qualified investment advisor can help with five simple strategies for hedging.

Protect Your Investments as Bulls are expected to continue on major stock markets this summer due to strong corporate earnings and tame inflation. The S&P 500 has advanced over 26% and 86% since 2020, respectively.Retirement investors can lock in long-term gains with hedges, preserving their accumulated gains without compromising opportunity. A qualified investment advisor can help with five simple strategies for hedging.

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