The Motley Fool Discussion Boards
Investing/Strategies / Retirement Investing
|Subject: Re: Strategy comparison S&P500 vs. IUL||Date: 4/3/2013 7:34 PM|
|Author: Dwdonhoff||Number: 71686 of 78325|
If you are "long" your home, and you buy homeowners insurance, you are placing a hedge.
Whaaat???? This makes no sense.
A Beginner's Guide To Hedging
The best way to understand hedging is to think of it as insurance. When people decide to hedge, they are insuring themselves against a negative event.
Yep... Investopedia... that's a pretty obscure & oddball reference source ;~)
How did a house and homeowners insurance get dragged into this thread, anyway. We are talking about investments, not homes.
A retirement account is a 'financial home' equivalent. It is relied upon by most folks, usually without alternative options, for their survival.
Dave, you keep using loaded words & phraseology. You keep calling a long position "naked". No normal investors term it that way.
I guess it depends on your idea of "normal." I learned market finance from professional traders where risk management is everything, and undercapitalized drawdowns kill more accounts than anything else. Not saying that's superior, or normal... but that's the world I know.
A long is a long. The only customary use of "naked" in investment parlance is a "naked short" position. And a naked short is pretty well known to be a high-risk position.