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Investor2014

03/24/21 8:30 AM

#304425 RE: 512 #304424

Hopefully most retail investors are sensible enough to diversify a portfolio of investments, which is at least related to hedging although not with perfect negative correlation.

frrol

03/24/21 8:55 AM

#304429 RE: 512 #304424

Investors don't hedge the idiosyncratic risk in their individual positions, because that's the risk they want exposure to. Ie, it's why they bought that specific stock.

The finance term "hedge" is misunderstood and misused by new investors and speculators. It's a simple concept, but not intuitive.

The "greater your core, the smaller your hedge", is nonsense in every literal, figurative, theoretical, and practical sense.