Is there anything like in the big short movie , where I get profit when market crash.
I don’t want to sell call or buy put… I want something for next 1 year origin.
Short future or sell call, or buy put. Other instruments are not available in India.
What is available in other countries
when the market falls government cuts repo rate to increase liquidity to recover from fall. impact of this, debt funds will start performing better.
logical reason.
- Investors need alternate instruments to invest.
- The result of reduced repo rate, new bonds will give a lesser interest rate compared to previously issued bonds. hence, the investor won’t show interest to buy new bonds, they prefer to buy previously issued bonds to get a higher interest rate. when demand increase, the bond value will start to go up we make a profit.
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You can buy Gold ETF or Sovereign Gold Bonds as a good hedge for your equity portfolio for those big crashes. Derivative portfolio can’t much be protected through these or other instruments. Better have hedges in derivatives only for that separately.
Thank you , yes I have brought Goldbees as of now
It can depend on the reason for market crash and how deep the fall is, if it has fallen for reasons like trade war, currency war, geopolitics etc gold will gain value, if it is normal economic recession then gsecs should gain value.
“Gold and bonds often have a very low or negative correlation with equities, because investors flock to these markets during times of crisis.” Ref. https://www.etfscreen.com/correlation.php
We should also know about Silver Thursday & 1994 bond market crisis.
“Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1” – Warren Buffett
how can I invest in the pandemic bonds and the bonds issued by the world bank ?