Extreme swings in the stock market spur demand for feasible measures to safeguard traders’ sof stock equities. In the wake of increased occurrences of stocks’ downward momentum intimated by seasoned and experienced stock market operators, investors find themselves in a quandary: Making the best decision as to the course of action to undertake. The options are varied; the adopted mitigation measures however, hinge on several underlying factors including the investment climate and the market risk.
In these shaky times, a secure way to curb rate risks to is to buy protection in the form of put options. This type of contract enables the investor to assess, to a certain extent, an asset’s potential price and volatility and decide how to benefit from it. Simply put, in the absence of a binding agreement, the buyer may choose not to purchase some assets if their value drops and hence hedge against major losses.
Investors can put some insurance on equity if they shift attention to real estate area as well. Gary Shilling, a well-renowned columnist and financial consultant claims that, all the ups and downs notwithstanding, the real estate market still has a few aces up its sleeve, specifically medical office buildings and rental apartments. These sustainable real estate assets can yield long-term profits, and are insulated against market fluctuations for two main reasons: they provide steady influx of cash and constitute a tangible piece of property.
In reality, tangible property is often a safe haven against market risk. Gold, for example, still constitutes a lucrative investment despite the drop in commodity shares recorded this month. Likewise, art can warrant immunity to market movements since, unlike other assets, it sets the place for lucrative business prospects they could present for transactions in humanities and social sciences.
Intangible property, including annuities and exchange-traded funds is a lucrative option too, especially since it rides on established companies with steady cash flow to reduce the exposure to a financial disaster. Annuities are long term investments that allow people approaching retirement to obtain a guaranteed income without fear of financial loss. Exchange-traded funds or hedge funds act a safe harbor from market oscillations seeing that they provide a wide range of options when the investor’s assets betray instability. IShares, Russell Investments and EGShares play it safe and seek to invest in little or no volatile assets with an aim to curbing high prices.
None of the previously stated likely measures is completely risk proof. Accordingly, insecure or less prepared traders should refrain from any investing until the market calms down.