USA Today – Given our chaotic times, you may be wondering how to protect your investments against some sudden, unforeseen event: a stock market meltdown, a crisis in the banking system or an invasion of Venusian brain garglers.
In finance, a hedge is a strategy designed to offset certain risks — hence the phrase “hedging your bets.” If we define risk as losing money, then a simple hedging strategy for a stock portfolio is diversification: Buy other investments, such as gold, government bonds or cash, whose value doesn’t rise and fall in lockstep with the stock market.
