With the credit crisis everyone is concerned at the rate at which their assets are losing value. If you own a house I am sure you wouldn’t risk not insuring it. So why take that chance with your stock portfolio in market conditions like this. Many people don’t know that you can protect your investment or make money in a falling market using financial instruments like warrants and futures. Standard Bank Online Share Trading has some good courses to help you understand these products as they are not for those that have not educated themselves on how they work. I am sure other brokers have similar courses. The point is you can either hedge you current portfolio, preventing a substantial loss in a falling market by buying put warrants on the shares you own. This ensures that if the share you own tumbles, the put warrant shoots up protecting your investment and allowing you to hold onto the stock for the long term. There are other benefits to these instruments but hedging is one of them.
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