Hedging the inflation crash III

oldwen
2021-09-03

Part 3 of Hedging the inflation crash. Fear in the market often leads to massive selloffs in general. Buying anything right before the correction/crash is often accompanied by much regret and sometimes panic selling. One of the ways to reduce the risk that you are taking in a correction is by diversifying into ETFs such as $S&P 500(.SPX)$

Most ETFs are diversified into various sectors and industry. In a market correction, although we see most industries turning red, there will be certain sectors that limits the downside. ETFs are a simple way to diversity and reduce the risk during a very volatile market.

Some ETFs even provide dividend! One such ETF that I recommend in a volatile market is $Global X NASDAQ 100 Covered Call ETF(QYLD)$. QYLD is an ETF that profits of Call Options on the S&P500. The premium it receives from selling call options is paid out to the investor. If you are unsure of how Options work, please do you own diligence in understanding them before buying this ETF to give you a better understanding of when this ETF profits most. Currently QYLD gives an estimate of ~12% dividend and is paid out monthly. After doing my own research on this ETF, i believe it is highly beneficial to own some shares in a volatile market where the premium from selling call options are high.

Other similar ETFs are $Nationwide Risk-Managed Income ETF(NUSI)$ that has a lower dividend return but more downside protection in case the market goes the wrong direction. There are many good sources online that explains the subtle differences between the aforementioned ETFs and how they can be suited to different financial portfolio.

In conclusion, ETFs are ways to reduce your risk in the market while being invested in the market. There are some ETFs that thrive in volatile market situations and it is up to the investor to use it for profits.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • 栋哥
    2021-09-04
    栋哥
    大多数ETF分散到不同的部门和行业。在市场回调中,虽然我们看到大多数行业翻红,但也会有某些行业限制下跌空间。ETF是在非常动荡的市场中实现多样性和降低风险的一种简单方法。
  • 哎呀呀小伙子
    2021-09-03
    哎呀呀小伙子
    原来ETF是在非常动荡的市场中实现多样性和降低风险的一种简单方法,才知道,谢谢分享。
  • 路易斯二世
    2021-09-10
    路易斯二世
    ETF是在投资市场的同时降低你在市场中的风险的方法;深表认同啊!
  • 七色祥云6
    2021-09-04
    七色祥云6
    ETF是在投资市场的同时降低你在市场中的风险的方法,怎么买,还不太会,教一下我!
  • 揭人不揭短
    2021-09-03
    揭人不揭短
    我买波动率做套保,好像效果也可以,跟这个比哪个更靠谱?
  • 小时候可帅了00
    2021-09-03
    小时候可帅了00
    这是绝技呀,熊市的保命绝招,今年要是熊了,我来验证一下这个方法。
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