Remember playing the childhood game of Hide and Seek? One of your friends was “It” and the rest of the kids tried to find the best places to hide so as not to be found.
Now that you’re older, you may still be trying to play that game with your investments in the Stock Market. The rise and fall of the market may be similar to “It” almost finding your hiding place.
Hide Your Investments
You may be hiding your investments by hedging. Maybe you’re new to the investment world and need the term hedging defined. Simplest answer: Think of it as a form of insurance.
According to Investopedia, “When people decide to hedge, they are insuring themselves against a negative event’s impact on their finances. This doesn’t prevent all negative events from happening. However, if a negative event does happen and you’re properly hedged, the impact of the event is reduced.”
An article titled, “There’s No Place to Hide Anymore When the Stock Market Plunges” by James Mackintosh, tells you even if you’d hedged, it wasn’t enough in September. He writes, “September hurt shareholders, not only because stocks fell but also because the things they’d bought to protect their portfolios also fell.”
September may have felt for investors like trying to play Hide and Seek in a big, empty room in broad daylight!
Hedging Failure
Mackintosh continues, “This total failure of hedging is unusual. It wasn’t just the normal pattern of asset returns that broke down.” High-quality stocks fell more than the market. Smaller companies beat bigger companies.
Says Mackintosh, “Now the froth has been blown off the big disruptive growth stocks, we can hope that the normal market relationships will reassert themselves. But the biggest hedge against losses, Treasurys, probably won’t be back as a useful tool for years if ever.”
Spelling Note on Treasurys
If you’ve used Treasurys as your hedge, this isn’t good news. Having your hedge (insurance against loss) offer you no protection must feel like the neighborhood bully giving away your best hiding place.
Mackintosh said of Treasurys, “(At first), they made roughly 10%, before the brief period of chaos in the bond market. But since then they’ve been basically flat, giving investors little to no protection—including inflicting a small loss as stocks fell from the Sept. 2 high.”
See Related: How to Manage Risk For Your Investments
What if you didn’t have to worry about the neighborhood bully? Or hiding your hedge or other diversification? You could safeguard your childhood memories of Hide and Seek. Keep them separate from your investing ideals.
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Check out What is iFlip? video.
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What About Market Crashes?
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In fact, over the last nine crashes, this technology saved an average of 20.8 percent, allowing your money to grow farther with compound interest. Remember, this isn’t a day trading investment or a get rich quick scheme. iFlip is designed for long-term investing.
See related: Is The Stock Market Crashing Again?
Let Hide and Seek remain a childhood game. Not something you do with your finances. Hop over to iFlip. Check out how you can easily get started with your personal retirement planning and investment.
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