How do you hedge your portfolio?

[RLX]

@Etypsyno

Liquidity providers like Flow Traders or Virtu Financial, in general, are really direct hedges. To the contrary to having gold miners as a hedge, these companies directly profit of volatility (or more specific volumes and spreads which tend to increase when volatility increases). IMO this is one of the most direct hedges without using other products than simple stocks. Remember that gold initially also dropped during the March crash.

I use both of them in that role also. As they are a bit uncorrelated with the markets and benefit from market volatility (and also from the growing of investments). I also invest in stock exchanges (Nasdaq, ICE, Euronext) and waiting for T212 to invest on brokers (flatexDEGIRO). (@David; @Martin; @PeterA; @Tony.V; @Team212 don’t forget this request. )

I’m also investing in Intellectual Property, as it is financial markets-uncorrelated. The vehicle I use is an Investment Trust (SONG).

Both investments are residual, because I’m long in market risk (equity risk), and we need to expose to risk for profiting.

I’m also looking to other areas of financial markets-uncorrelated investments, such as exposure to legal risk (litigation finance) and climate risk/catastrophe risk/insurance-related risks (insurance linked instruments).

I’m a bit of long thinking in investing in Scotch Whisky directly (not by buying stocks or other financial instruments):

Whisky, music and the great outdoors are among hot alternative assets in 2021. To invest in your health, consider the $1,495 LiteBoxer, the “Peloton of Boxing.”

An employee moves a wooden cask of Chivas Regal blended Scotch whisky at the company’s Strathisla distillery in Keith, U.K.

In Bloomberg newsletter (16/01/2021)

There is a British Fintech launched in 2015, WhiskyInvestDirect, a Scotch whisky marketplace/trading platform that allows investing in raw Scotch whisky (grain and malt) from distilleries that ages in casks, and after that the investors could sell it to the major whiskey brands or to other investors:

Investing in maturing Scotch whisky can achieve high returns.

From the Bloomberg article:

Why now: Spurred by rising demand from Asian investors, the value of rare whisky has soared 564% in the last decade, and the asset has outperformed not only fine wine but every other luxury asset, according to the Knight Frank 2020 Wealth Report. Knight Frank’s data shows rare whisky soaring despite the volatility in markets in recent years.

Risks: Casks, which are stored in warehouses, can leak and break down, degrading their contents so much that the liquid no longer qualifies as Scotch. You can insure casks, but that won’t make the whisky you’ve waited for taste any better.

Note: Scotch Whisky and other real assets are alternative investments that share in common, the fact they are iliquid investments.