- Joined
- 4 December 2008
- Posts
- 486
- Reactions
- 281
Thank you very much to everyone who took the time to reply. I gained a lot, I learned something about options, alternative investment funds, hedging, and last but not least, had my hopes and dreams crushed under the weight of reality.
The risks outweigh the possible benefits. I'd have to take the remaining cash kept aside for margin call of the long investment and use it to supply the margin for the hedge. As long as I'm 100% hedged I'll never get out of the hole because I can't profit from a market recovery. If the market goes up I'd have to sell shares in the long investment to cover the margin of the hedge which is now losing money.
A partial hedge may be better. But it still contains the same flaw, an inexperienced trader at the wheel. I guess it's just that if I can hang on till the market recovers I won't have wasted the last 10 years of my life saving every cent I could. So I was hoping to make the best of a bad situation by at least making some money from the market fall. But all I'd really be is an inexperienced trader loaded with debt, gambling the last of his money to win back his loss. I know that if someone came to me with the idea I just posted here I'd tell them "Sounds like you're digging yourself a deeper hole". I already knew this, but I didn't want to miss an opportunity if there was one there.
Oh well, I'll look at moving what I have left to a fund with less fees, learn as much as I can about the markets and make it all back some day. Then someday it'll be my turn to nicely tell some young trader that he's stuffed.
Cheers.
The risks outweigh the possible benefits. I'd have to take the remaining cash kept aside for margin call of the long investment and use it to supply the margin for the hedge. As long as I'm 100% hedged I'll never get out of the hole because I can't profit from a market recovery. If the market goes up I'd have to sell shares in the long investment to cover the margin of the hedge which is now losing money.
A partial hedge may be better. But it still contains the same flaw, an inexperienced trader at the wheel. I guess it's just that if I can hang on till the market recovers I won't have wasted the last 10 years of my life saving every cent I could. So I was hoping to make the best of a bad situation by at least making some money from the market fall. But all I'd really be is an inexperienced trader loaded with debt, gambling the last of his money to win back his loss. I know that if someone came to me with the idea I just posted here I'd tell them "Sounds like you're digging yourself a deeper hole". I already knew this, but I didn't want to miss an opportunity if there was one there.
Oh well, I'll look at moving what I have left to a fund with less fees, learn as much as I can about the markets and make it all back some day. Then someday it'll be my turn to nicely tell some young trader that he's stuffed.
Cheers.
