Which Technique (If Any) Are You Currently Using Most To Hedge Your Portfolio?

Adam Taggart
By Adam Taggart on Wed, Sep 10, 2014 - 4:39pm
None/Not Hedging
18% (13 votes)
Increasing the % of cash in my portfolio
58% (42 votes)
Stops
1% (1 vote)
Inverse ETFs
10% (7 votes)
Shorting
4% (3 votes)
Options
8% (6 votes)
Futures
0% (0 votes)
Total votes: 72

Based on the argument for hedging made in our recent report Defying Gravity, we're curious to learn how commonly hedging tactics are used among PeakProsperity.com's readership.

Please give a moment to share which (if any) you are currently using to protect your wealth against a market downturn (the poll results are anonymous)

Unfortunately, the poll feature only allows the selection of a single answer. If using several of the techniques above, just select the one protecting the greatest share of your portfolio.

thanks!

Adam

14 Comments

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1220
Farmers?

are there any here? Been hedging all my life! Pests! Pestilence! Drought! Gubmint! Neighbors! been goin' on a long time. Hedging is new to those not attached to the land

 

there was no entry for those tied to land/commodity producton, if hedging is buying fuel fert etc. we hedge and have for years

JayPaul's picture
JayPaul
Status: Bronze Member (Offline)
Joined: Aug 28 2014
Posts: 30
Yes....

trailing stops, cash, PM, and no debt and retirement accounts just in case the Government doesn't steal it! In other words we are prepared for the good, bad and ugly, normal, new normal, new world order, miracles, etc... You have too!

Oliveoilguy's picture
Oliveoilguy
Status: Platinum Member (Offline)
Joined: Jun 29 2012
Posts: 578
Alternate Forms of Hedging

Like Robie I'm growing food on a scale that is above the "home garden" level. In a "Market Down" or "Grid Down" situation I have the infrastructure in place to ramp up the food production. 

Second hedge is installing solar with money that would otherwise be in the market. I'm gambling on a slow payoff as electric prices increase over the 30 year life of the system, not to mention the value of backup in a real societal meltdown. 

Third is investing in a rain catchment water system. Again dollars that might be at risk in the market are put into tangible assets that provide a clear Return on Investment.  

Forth is buying and holding Real Estate.

There is a lot of Peace of Mind found in investments in one's own infrastructure, rather than in the  electronic manipulations against a dead currency or digital derivatives of distant assets.

jgritter's picture
jgritter
Status: Gold Member (Offline)
Joined: Dec 13 2011
Posts: 273
401k/99%ers

I'm about 15% in physical silver and in grid down preps like a wood stove, well, garden, etc.  Any thoughts for those of us with savings tied up in a 401k?  I struggle with the "take a 30% hit now vs. a 60% later" option. I'm inclined to let it ride with the idea that there will be some kind of a recovery because I'm 25 miles down wind from 2 nuclear power plants and if the grid truly does go down my situation may not be tenable anyway.  So other then "energy and transportation might be good and finance and china might not be so good" any thoughts for those of us with limited wiggle room? 

John G

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1988
Details

The options in my husband's 4% matching 401K are either company stock--all our eggs in one basket--or cash. We pull any new savings out to cash every six months.

Since he cannot take anything out of his 401K, the only real control we have (other than selling stock for cash) is tangible goods for homesteading.  My retirement dollars, like many of the above commenters, went into things we have a great ROI on. This was our only way to diversify that made sense to us. The large kitchen garden, energy efficiencies, a source of water, and such make us a hefty profit in savings if you compare our costs to the average in the area. Plus., they give us peace of mind. And sweat equity is a great retirement investment, too. We just got a daylighting system for a bathroom with no window and dealt with a mold problem in there.

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3200
hedging?

I'm not sure hedging is the right word, but we've been investing in a number of preparations for years, most of which are paying off.  We have grid tied solar that saves us a bundle every year since our house is totally electric except heat, which is almost exclusively by woodstove.  That saves us another bundle every year compared to what we paid for fuel oil.  We raise quite a bit of food, and are increasing our production every year.  We have two cash iras that I haven't closed yet due to tax considerations.  They are both in cash at the moment.  We also have a Roth PM ira that I see no immediate reason to close.  We also have cash and PMs outside the ira system.  I'm retired with decent pension and SS, but my wife still works until our son gets his MBA in '16.  We just invested in new siding with extra insulation that hopefully will further decrease our heating bill. 

All that said, it is now clear that if I had put all my financial assets in an S&P index fund in March '09 (when I attended my first Rowe conference) I would have tripled that money by now.  Instead, except for small forays, I have kept everything in cash and PMs since then.  And now I see little or no reason to get into any of the markets given the shakiness of the system.  Meanwhile, a friend who plays at buying index funds on dips and selling on peaks keeps on making money.  Of course, he has the time to monitor the markets on a near continuous basis.  I don't have the time or inclination to do that.  I'm afraid of options and futures but inverse etfs may not be a bad idea.

Doug

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Deployment of Resources

Half PMs, Half Cash, Half Food, Half bolt-hole (Yacht) and the rest on offspring.

Unreal estate is too mainstream for my taste. I feel a cattle prod trying to get this orrinary bull up the chute. He does not like the smell of blood. Prefers to die free.

TechGuy's picture
TechGuy
Status: Gold Member (Offline)
Joined: Oct 13 2008
Posts: 453
The List

"I'm about 15% in physical silver and in grid down preps like a wood stove, well, garden, etc. Any thoughts for those of us with savings tied up in a 401k?"

1. Off Grid Water supply (ie Well accessible without Grid Power)

2. 20 to 60 acres, mixed with wood and tilable land. Woods for heating, fields for growing crops. Presume that every few years you will experience a near total crop loss. Always grow twice the amount you need. If end up with a surplus sell\barter old remaining stock. 

3. Machine tools. Vertial mill, Lathe for repair and fabrication. CNC if you can afford it, Band Saw, Welding equipment (Oxy-Actelyene) MIG/TIG. tool grinder (sharpen Drills, endmills, lathe tooling) Hand tools, power drills, hand drills, skill\jig saws, hand saws, Wood splitter and accessories. Lumber mill (for cutting logs into 2x4s, 4x4s. Soldering equipment (for electrical repair)

4. Spare parts or backup units for essential tools and equipment (ie Well pump, solar power systems), spare Chain saw blades, bar oil. Fasteners (nails, screws, bolts/nuts) water piping/PVC drainage pipe, wood stove pipe, valves, electrical wiring, electric switches/breakers. Lighting equipment (fixutures, light bulbs, etc). Plastic sheeting/Tarps (broken window or something that need temporary cover). Replacement windows (incase on of your windows is broken). Consider making Lexan\plexiglass storm windows to protect your windows. Barb wire (quick makeshift fencing). Metal Stock for your machine shop (rod bar, squarebar, sheet metal, etc). Endmills, lathe tool inserts. Paint/Paint Stripper, Phosphate acid (used to prep metal for paint). WD40, solvents (Denatured Alcohol, Acetone, methyl ethyl ketone, Paint thinner) Pentrating oil (rusted bolts), Tape (Duct, electrical, foil, packaging), Glue (Wood, polyurethane, rubber/flexible, epoxy), Varnish ( polyurethane, polyester), Sand Paper, scotch-pads and other finishing supplies. Brillo dishwashing soap and other kitchen cleaning supplies.

5. Fruit trees (Apples, Peaches, Cherries, etc) and bushes (blueberries, raspberries)

6. Security and monitoring equipment. PIR instrusion detection systems, CCTV cameras, alarm systems for outbuildings. Fencing, gates. 

7. Small farm farming equipement. Tractor with PTO and tractor accessors (plow, front end loader, harvesting equipment). grain dryer. Greenhouses (for early seed starts and for late season crops). Chicken Tractor (Chick coop on wheels so you can periodically move your chickens to different locations on your property)

8. Canning equipment for winter/long term food storage. Mylar storage bags and vaccum sealers. Extra freezer (with auto defrost) for storing non-cannable foods. Freeze dry equipment, dehyration tools. Bread maker (optional)

9. Stock up on bulk dry goods: Sugar, Wheat, dried beans, Oats, cocoa (chocolate powder), spices (cinnamon, pepper, salt), powdered drink mixes favorite condiments (ie hot sauce, soy sauce), soap/shampoo/deorderant/detergent, toothpaste, toothbrushes,  chicken feed (or rabbit feed). Candles/Lamp Oil. 

10. Fuel stock pile (ie gasoline/diesel for Tractor/generator/chain saw), Gasoline and diesel can be stored for long term, if they are sealed in a air tigh metal container (Plastics are semi-permeable and will permit air to penetrate). gasoline also contains dissolved butane (used to assist ignition) and will evaporate out of gasoline. Buy gasoline for stockpiling during the spring as winter blends contain oxgenators that will degrade the fuel. I forget what additive is in Summer blends, but it has issues with long term storage. use gasoline without ethanol. Add fuel biocides (both diesel and gasoline) to prevent microbes turning your fuel into varnish. Propane for kitchen stove or other propane powered devices. Motor oil, Lubercants, grease, transmission fluid, brake fluid, radiator coolant (if your tractor/generator is water cooled). Starter fluid. Spare oil fiters.

11. Spare clothes, underwear, socks, shoes, boots, sewing kit and sewing machine. (When ever I go to trade shows or events, I get as many free tee shirts even if I wouldn't wear them in public) and I put the in a box. Either use them when I am doing dirty jobs, or at the very least, use them for rags). Cloth sold on rolls (for patching jeans, shirts), spare buttons, zippers, shoe\boot laces.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
401K's

In 2009 I took a 401K loan to buy PM's.  That is now paid off, and I am getting really tempted to do it again with 18-handle Silver, while availability at low premiums remains.  The beauty of this is that you pay yourself back the interest rather than a bankster.  I view it as more of a reallocation vs. taking out debt.  Just one option to consider....

Yoxa's picture
Yoxa
Status: Gold Member (Offline)
Joined: Dec 21 2011
Posts: 306
More for the list

12. Waste disposal facilities - septic field in good repair, burning barrel, compost pile, etc. Chickens can clean up a lot of kitchen scraps.

13. Warm bedding and comfortable beds - extra blankets or duvets, cozy flannel sheets, warm pajamas, even a stylish bed canopy with curtains to pull closed on cold nights. Just about anything is easier to face after a good sleep.

14. Programmable thermostat(s). Your living or working spaces don't need to be equally warm (or cool) around the clock.

 

redinr08's picture
redinr08
Status: Member (Offline)
Joined: Mar 21 2008
Posts: 20
Windowless bathroom
Wendy S. Delmater wrote:

 We just got a daylighting system for a bathroom with no window and dealt with a mold problem in there.

We have a windowless bathroom also--please post a description or photo of your "daylighting system".  Thanks!

JayPaul's picture
JayPaul
Status: Bronze Member (Offline)
Joined: Aug 28 2014
Posts: 30
Hmmm...?

isn't this declared income then with penalty? Additionally isn't what you are paying back with already taxed income?

jgritter's picture
jgritter
Status: Gold Member (Offline)
Joined: Dec 13 2011
Posts: 273
Prepping/Resilience

Adam,

I'd be curious to know what might happen if you ran your survey again with an "investing in preps/resilience" option.  Your survey was obviously meant for players, but it feels kind of like you threw the preppers under the bus.  Judging from the responses, I'd say we might be a majority of your audience.

John G.

Kudzu52's picture
Kudzu52
Status: Member (Offline)
Joined: Sep 3 2014
Posts: 1
Prepping

We bought a house on 5 1/2 acres in the country to turn into a homestead.  We hope to be off the grid soon with solar, manual pump backup to our well.  We're acquiring non-electric backups to appliances and working on having a year's supply of food on hand.  Our goal is to be prepared for a grid-down situation, which we consider the worse case scenario.

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