Best Way to Hedge Against a Market Crash?

[NLTInvestor]

I'm wondering whats the best long term method to hedge against a market crash? Without options, inverse ETFs or anything that causes erosion.

Basically what has the least tracking error for the markets?

 

[Rhody Trader]

No matter what type of hedge you use there is going to be some kind of cost associated. The best tracker of the market is obviously going to be the market itself, but if you were to go short a basket of stocks which replicate a market portfolio it would cost you commissions and share borrowing costs (interest). At this point you'll most likely find futures the least costly method as their pricing really only factors in interest rates (and dividends) which are relatively low at this point.

 

[aparoid89]

Own a basket of investment grade bonds while you wait for your equities to regain their value.

 

[Martinghoul]

Buy some short-dated treasuries...

 

[lucas_king]

I'm wondering whats the best long term method to hedge against a market crash? Without options, inverse ETFs or anything that causes erosion.

Basically what has the least tracking error for the markets?

I would suggest spread betting. I know that sounds like it has little thought behind it, but here’s my rationale.

If you’re short on the index, you’ll receive interest for it (although at the present time, whilst interest rates are low, you’ll pay a little financing). It’s also very simple to do and keep track of.

For me, the leverage might be a problem when hedging. Typically, you’ll be able to ‘trade’ on margins of 1%. I put in the whole exposure (this can be adjusted so that you put in an amount that you think will support your position up to a level you think it won’t reach). This ensures that you won’t receive margin calls and be closed out prematurely.

Here’s the clincher for me: you won’t pay any CGT if you inadvertently make money on the hedge. This, along with the flexibility it gives me, means it’s my choice for hedging.

[I’m assuming you’re in the UK here!]

 

[scose-no-doubt]

I would say it's always best practice to pull out early if you're not protected.

 

[scose-no-doubt]

Buy some short-dated treasuries...

Eh? Don't you normally get an inversiamajigger, and whut abouts zirp? How much can that bank ya outside of yield?

I don't get it :-(

Also, hello. Long time :-D

 

[NVP]

I'm wondering whats the best long term method to hedge against a market crash? Without options, inverse ETFs or anything that causes erosion.

Basically what has the least tracking error for the markets?

as some already say here .........chase the Crash by shorting it and/or step out of the market into cash...or chase the buys...........trust me ..........even in a crash some things will go up

N

 

[random12345]

I'm wondering whats the best long term method to hedge against a market crash? Without options, inverse ETFs or anything that causes erosion.

Basically what has the least tracking error for the markets?

Get an allotment and grow some crops.