Hedging is one way to reduce investment risks and losses. It is a method for investors to ensure that there is insurance to protect themselves against a specific threat, such as currency fluctuations or differences in trading costs.
“As value investors, our business is to buy bargains that financial market theory says do not exist. We’ve delivered great returns to our clients for a quarter century — a dollar invested at inception in our largest fund is now worth over US$94 ($132), a 20% net compound return. We have achieved this not by incurring high risk as financial theory would suggest, but by deliberately avoiding or hedging the risks that we identified” — Seth Klarman, American billionaire investor, hedge fund manager and author
Throughout this column, we have shown that diving into investing is not as complicated as it seems. Even so, financing involves risks — as in everything else.
