It was the first full week of 2021 that all hedge fund and institutional traders were back on their desks after the holiday period.
With lots of uncertainty surrounding the stock market regarding stimuli, possible lockdowns, overbought momentum indicators and sell-offs in the largest stocks… What are those large traders looking at buying today and how should you position yourself?
There’s a lot of news on the horizon: The start of earnings season (financials and banks up first), and big data releases like employment and retail are all on deck for this week. So, will markets have the catalyst they need for a large correction in the next few weeks like Bitcoin experienced today?
We encourage all traders to analyze risk/reward and the probability of when an inevitable pullback will happen. When you find one on the horizon, one of the best things you can do to protect your assets is hedge your portfolio.
So, how do you hedge your portfolio? Glad you asked.
- Add defensive assets to your portfolio like a long-term bond. Every time the large indices head back toward their 200-day moving averages, we see rallies in bonds like Direxion Daily 20+ Year Treasury Bull 3X Shares ETF (NYSEArca: TMF).
- Add a non-correlated asset to your portfolio, such as gold. When stock prices drop, gold has tended to spike.
- Diversify through ETFs to eliminate systematic risk in markets by lowering exposure in individual stocks.
On top of hedging, if you’d like to learn the specifics and see which stocks I’m targeting moving forward, check out my interview with Midas Letter founder James West and other WealthPress traders.
