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1 point   posted on 07/24/08
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-11.27%
 risk: low

How would you hedge a commodity heavy portfolio?


The portfolio is commodity heavy and to top it all it is short stocks.Hence the volatility is gut wrenching.The utilities,consumer staples and Costco "hedges" are not working-I guess they are too "safe haven" stocks to rise when sentiment is positive.What stocks/sectors would serve the purpose of acting as a hedge?I am not looking at trading tools as it would involve lots of activity from my part-like adding and removing DTO(DB double inverse crude oil) at appropriate points. To set the ball rolling I am considering airlines -China Southern which being state owned is unlikely to go bankrupt.


Comments (7)

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Thomas George   16%     1 point   commented 75 days ago reply

I think I should start a fund that sells all my market timing calls-I am sure it will do well.:(
The moment I decided that I started to think of a commodity hedge-what happens-stocks down,oil up.
http://biz.yahoo.com/ap/080724/oil_prices.html

http://biz.yahoo.com/ap/080724/wall_street.html

The best hedge-stick to what one knows-I am good at strategy,suck at market timing.

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traderdrew   47%     1 point   commented 69 days ago reply

why wouldnt you just hedge with derivatives of the underlying equities or commodities you own. That would provide more direct protection than investing in instruments whose correlation to the underlying is quite variable.

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allstarinvestor   81%     1 point   commented 66 days ago reply

william oneil said that diversification is a hedge for ignorance, so like you said sticking to ones strategy may always be best

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Locationh   55%     1 point   commented 66 days ago reply

allstar hit the nail on the head. That is if your strategy works.

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nextfundmanager   N/A     1 point   commented 66 days ago reply

that is the game of the markets, work hard to find a working strategy and stick to it if and once you do

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Thomas George   16%     1 point   commented 53 days ago reply

Thank you for your comments.Point taken.

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Walter Thatcher   80%     1 point   commented 50 days ago reply

short one of the various commodities ETFs or ETNs.


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