Commentary
I’ve been seeing a lot of important questions recently from amateur investors regarding some of the more advanced topics in the investing world. Many people have been taught about things like diversification and dollar cost averaging, but don’t really understand concepts like hedging, offsetting different kinds of risk, or shorting stocks. In my first article on this topic, I started to explain some of the basics of how to think about hedging, and explained concepts like market hedges and shorting stocks.
This time, I’m going to address buying put options and hedging for inflation. This can be a complicated topic, so if you want more detail or have follow-up questions, just post something in the comments. One reader question about the mechanics of short selling will be the topic of a future article….