In layment terms, what is hedging. It's so confusing
2006-11-23 14:22:00 · 4 answers · asked by flameboy 2 in Business & Finance ➔ Investing
i meant, layman terms..in simple words, what is hedging
2006-11-23 14:22:50 · update #1
Hedging is something a newbie at stocks shouldn't be worrying about.
2006-11-23 14:30:47 · answer #1 · answered by Bob 3 · 0⤊ 1⤋
You have two children and you are poor.
You did not went to college.
You want them to go to Harvard or any other Ivy League School.
You are currently saving every paycheck since they were babies.
YOU DIE and they cannot afford to go to College and they end up poor just like you.
There is a RISK (Called DEATH) you have to reduce.
In this scenario you buy a Life Insurance big enough to send yout two children to college if you die.
The Life Insurance Policy is your HEDGE in case you die.
In the case of stocks is the same thing. (You are protected in case your company dies)
2006-11-24 06:00:03 · answer #2 · answered by Anonymous · 1⤊ 1⤋
Ask this question after about 5 years of investing. (notice I said investing... not gambling). Spend at least a year learning investing before putting down your hard earned money).
2006-11-23 14:48:08 · answer #3 · answered by Common Sense 7 · 0⤊ 1⤋
to enter transactions that will protect against loss through a compensatory price movement.
2006-11-23 16:24:56 · answer #4 · answered by Ciao! 2 · 1⤊ 0⤋