My Investing Muse

  News about Negative Equity (US homeowners) Source:  https://www.dailymail.co.uk/news/article-12275733/US-homeowners-lost-108-4-BILLION-home-equity-year.html Inside the negative equity timebomb: US homeowners lost $108.4 BILLION in equity this year - leaving more than 200,000 at risk of going 'underwater' if property prices fall another 5% Average US homeowner saw home equity drop of $5,400 in first quarter of 2023 Realtors say they are now seeing more homeowners in negative equity  It comes after mortgage rates reached an eight-month high of 6.81 percent   U.S. home equity changes year over year, Q2 2023 From CoreLogic’s 8 Sep 2023  report : In the second quarter of 2023, the total number of mortgaged residential properties with negative equity decreased by 6% from the first quarter of 2023 , representing 1.1 million homes, or 2% of all mortgaged properties. On a year-over-year basis, negative equity rose by 4% to 1.1 million homes, or 1.9% of all mortgag...

  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...