• 13 Posts
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Joined 4 months ago
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Cake day: August 3rd, 2024

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  • From my perspective you can’t bet both sides and still expect gains on average.

    Statistically you can. Firstly, when you invest you can limit how much that could be lost right off the bat by how you invest and via what amount. For example: BUYing $20k in 2 opposing stocks, split 10k each. Max possible loss? All $20k.

    Let’s say the Index goes up 10% which suggests on average that $20k is now $22k, or $11k/stock.

    In actuality stock A loses 50% but stock B gains 60%. Had you luckily invest solely in the right stock (B) with all 20k you would have made $12k. Badly (stock A)? Lost $10k. By hedging you dilute max potential gains to mitigate catastrophic loses.