Whats the best Hedge?

T

trading1

Normally, US bonds and JPY are good hedges, and this is borne out in recent years. Though they are both at the extremes of their range, its hard to see them continuing in the same rate and manner, because Japanese exporters already are suffering at far lower rates and US interest rates are super low. On the other hand, the SP500 is at great heights.

It would make sense for yen and US bonds to be at their extremes with the SP500 at lows, but there appears to be a mismatch between hedging elements. What is going to happen when / if the equities crash? What’s the safe haven? What is the counterbalancing trade?

Say, Germany, surprises and disappoints most people and does NOT given a blank cheque to the ECB or theres another middle east war or so on, is it correct to say that the traditional hedges are likely to be of limited benefit? It seems that shorting the SP500 is probably a better hedge, or are there better alternatives?
 
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mattress
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Would prefer something that moves in some inverse correlation to the market, the mattress won't. Am considering XME, as a play on the materials sector, seems vulnerable to market selloffs
 
Quote from trading1:

Normally, US bonds and JPY are good hedges, and this is borne out in recent years. Though they are both at the extremes of their range, its hard to see them continuing in the same rate and manner, because Japanese exporters already are suffering at far lower rates and US interest rates are super low. On the other hand, the SP500 is at great heights.

It would make sense for yen and US bonds to be at their extremes with the SP500 at lows, but there appears to be a mismatch between hedging elements. What is going to happen when / if the equities crash? What’s the safe haven? What is the counterbalancing trade?

Say, Germany, surprises and disappoints most people and does NOT given a blank cheque to the ECB or theres another middle east war or so on, is it correct to say that the traditional hedges are likely to be of limited benefit? It seems that shorting the SP500 is probably a better hedge, or are there better alternatives?
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I don't like it anymore than you do, and I hate to be asscociated with those crack pots. but what I use to keep in cash, I now keep in gold. The funny thing is, it has absolutely nothing to do with the USD. So it's the same ounce whether you buy it at 1500 or 2000. It can really mess with your mind (if you are use to keeping score in dollars.)
 
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