How To Hedge When The Markets Are Down
It’s no surprise that everyone loves it when the market is on the up. When it is, everyone wins then they invest. Put your money wherever, reap what you earn, rinse and repeat. However, it can’t always go up. The old adage of “what must go up must come down” rings true when it comes to investing.
And when that happens, people all over the Investing world feel the crunch. The good times stop, and the companies that seem so promising before suddenly start to fall apart as Investors pull back their funding and look elsewhere, and the markets slowly (or quickly) change and a small dip follows through.
Keep in mind, all of what’s said works pretty much through dips, recessions, and more when the market down turns. Sure, dips aren’t that bad and aren’t universal, and recessions tend to be a good thing in the long run as it flushes out the chaff from the wheat after a while, but for investors it can be a little bit hard. Many people, especially those that like high stakes, tend to play it more conservatively and just wait till the market starts to climb again.
So during these down times, what is an Investor to do to continue earning beyond inflation rates, and continue to earn on their investments? Well, for starters there’s a lot of ways that an Investor can continue to earn.
First off, there are some markets that are almost recession proof. Markets that typically include utilities, metals, and commodities. Silver, Gold, Oil, Gas, Electricity and the like tend to make a lot of money even during the dip because these are things that are either finite in number, or are constantly used and thus never seem to really feel a down turn when a dip comes.
Another investment to hedge your investment is putting your money in Bonds and CD’s. While typically these don’t earn a massive return, they do end up outpacing inflation by a fair amount, with the added bonus of putting your money somewhere safe. A lot of investors tend to put them in ladders, where a third of their investment goes into a 6 month Bond, a 1 Year Bond, a 3 Year bond and a 5 Year bond and then use that money depending on how the market looks when they mature.
The third option is to find a market that’s on the rise; and right now it looks like FinTech companies are on the rise for the sheer fact that the new developing tools they’re creating for investing work outside of the current markets because no one knows how they perform. That uncertainty is what makes them enticing to invest in.
One company that everyone seems to be talking about is Konzortia Capital, with their current Koura stocks that act as both a liquid asset and a stock asset at the same time.
Other than that though, most safe bets for Investors to hedge just seem to be stick back, and either go with something so new no one knows how it handles, or go with old tried and true formula that tend to work.