My Investing Muse

During the bull market, my strategy is to  buy great companies at good discounts . I spend time going through their earnings, understanding their fundamentals, and identifying their moat. Once qualified, I “try” to obtain a fair value and take my position. After purchasing, I hope to hold the stocks for a long time, for decades should the earnings continue to demonstrate that their fundamentals are sound. Will this strategy work in the coming recession? Personally, I do not think so as downward price pressures are coming. My “current” strategy in lieu of recession In lieu of recession, I am buying inverse ETFs. It is buying the market to go down but at a lower expense than shorting. It could take a while before the market turns bearish eventually. I am not planning to add to any of my shortlist stocks during this “bearish” season that could last months. From these inverse ETFs, I have been taking profits and re-investing back the profits from my trades using week or month time hori...

  What is hedging? Fidelity defines the following hedging: Hedging is an advanced risk management strategy that involves buying or selling an investment to potentially help reduce the risk of loss of an existing position. Investopedia has the following definition: Hedging techniques  generally involve the use of financial instruments known as derivatives . Two of the most common derivatives are options and futures. With derivatives, you can develop trading strategies where a loss in one investment is offset by a gain in a derivative. Magolorean states the following as common hedging strategies: There are three common hedging strategies:  diversification, options trading, and futures contracts . Each strategy has its own advantages and disadvantages depending on your individual needs and goals as an investor (Below are some suggestions about hedging when I asked ChatGPT.) Diversification : One of the simplest and most effective ways to hedge a portfolio is through diversif...