There is significant risk in the current stock market. By almost all metrics, I find the market to be about 25% to 30% overvalued. It is, according to the Shiller P/E Ratio, the third most expensive market in history.
On Wednesday, we saw the market shake a bit. Over the years, I developed a long-term diversified portfolio that does not rely on hedges (because long-term strategies don’t depend on market corrections or even crashes).
I recognize that some investors may want to hedge, however, while others may want to find a way to profit from a possible leg down. My new stock advisory newsletter, The Liberty Portfolio, will offer examples on how to do this. So for those seeking a hedge, here are ideas on buying puts to backstop your portfolio.
They effectively act as insurance on your portfolio, so it’s a question of how much you want to pay to get it.