Plan For an Economic Meltdown
If you're an index investor, you can do very well by using this tool to measure "fear" in the market.
The Income Strategy of the Future
As a great options trader once told me -
professional options traders are a different breed. We take a statistical,
mathematical, rational approach to the marketplace. We add another layer of
probability and risk management that is not possible with stocks
alone.
We make investments on things like volatility and don't always care which way a stock or ETF moves. Everything we do is at least partially hedged, which reduces the need for Maalox, Prozac and heavy drinking, which many of my stock-trading buddies rely on almost daily.
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We make investments on things like volatility and don't always care which way a stock or ETF moves. Everything we do is at least partially hedged, which reduces the need for Maalox, Prozac and heavy drinking, which many of my stock-trading buddies rely on almost daily.
How Much for the Island?
Investing in gold is often called a “fear trade.” In times of crisis, it’s believed that gold will hold its value, and even rise, while the value of paper currencies and other assets fall.
If you bought SPDR Gold ETF (NYSE:GLD), which seeks to track the price of physical gold, 2 years ago, you’d be up around 36%.
The S&P 500 is down around 15% during that time.
You probably already know that gold hit a new all-time high yesterday at $1,200 an ounce. And even though other traditional measures of fear – like the volatility index (VIX), bonds and even stocks – didn’t move much today, the move in gold can’t be ignored.
