stops

Blog

Gravity Returns - The Market Drops Nearly 5% in 3 Days

Years-long trends are finally breaking
Monday, October 13, 2014, 6:14 PM

A month ago, in an analysis titled Defying Gravity, I wrote about the unsustainable state of the stock market's high prices.

In it, I noted how the stock market had risen for an aberrantly-long time time without a correction, and that it hadn't even tested its 200-daily moving average price once since the beginning of 2012: » Read more

Podcast

Shutter_M/Shutterstock

New Harbor: Hedging 101

How to defend against a market correction
Saturday, September 13, 2014, 2:02 PM

This week's podcast build on our recent report on hedging, driller deeper into how the technique can be used to offer protection against falling asset prices.

There are numerous ways to hedge, which vary in cost and complexity -- with several being quite simple and low-cost (such as building cash or employing stops). But many investors don't practice them, mostly out of unfamiliarity. Which is a shame, as often a small degree of defensive planning can provide substantial avoidance of large losses. (In fact, our recent poll has discovered that one of the most common and cheapest methods of hedging -- setting stops --  is hardly used by PeakProsperity's readership.) » Read more

Blog

bochimsang12/Shutterstock

Defying Gravity

The case for hedging against a market downturn
Tuesday, September 9, 2014, 11:05 PM

Today's markets exist in an Oz-like, fantasy world. For 5 years now, stock and bond prices have risen like Dorothy's balloon, without so much as a puff of downdraft to spoil the fun.

Everybody likes higher prices, so let's have them always go up! Forever!

Whether that can happen is a topic of current hot debate, though few think corrections have been permanently banished from the financial markets. » Read more

Insider

Dreamstime

How to Hedge Against A Market Correction

Reducing the vulnerability of your portfolio
Tuesday, September 9, 2014, 11:04 PM

Executive Summary

  • What you need to know about hedging with
    • Stops
    • Inverse and leveraged ETFs
    • Shorts
    • Options
    • Futures
  • Deciding which hedging instruments are appropriate for your portfolio

If you have not yet read Part 1: Hedge, Dammit! available free to all readers, please click here to read it first.

OK - hedging sounds prudent. But how do you do it?

Our focus here in Part 2 of this report is to cover the most common vehicles used in hedging strategies. Each one merits its own dedicated report (a series we'll likely create in the future) to truly understand how and when to best deploy, so this report will focus on providing you with a good introduction to each, with guidance on how to further explore the ones that strike you as appropriate for your needs and personal risk tolerance.

Before continuing further though, let me make a few things absolutely clear. This is NOT personal financial advice. This material is for educational purposes only, and as an aid for you to discuss these options more intelligently with your professional financial adviser(s) before taking any action. (If you do not have a financial adviser or do not feel comfortable with your current adviser's expertise with these hedging vehicles, we'll be happy to refer you to our endorsed adviser)

Suffice it to say, everything discussed in this report (even the % cash component mentioned in Part 1) should be reviewed with your financial adviser before taking any action. Am I being excessively repetitive here in order to drive this point home? Good... » Read more