Hedge against fed rate increase?

[sv2007]

Hedge funds and hedging are different.

I think hedge funds are like mutual funds except they are exempt from certain oversights and hence cannot be marketed to just anybody. But I don't know the details.

Hedging, at its most basic definition, is buying insurance for your investments.

[corn18]

There are many ways to hedge. I hedged my stock holdings before Brexit by buying out of the money puts against the S&P 500 via the SPY ETF. If the market dropped, I can sell the puts at a profit or hold them to maturity (more risk). I bought $10k of puts against $200k of holdings. Brett happened, my puts went up 10% ($1,000), my holdings went down 3% ($6,000). Not pure insurance, but a little. I got lucky because I sold the puts at a profit and the market recovered within a week.