News for hackers. Stuff that matters.

A comment on Why Index Funds Are Like Subprime CDOs. Parent comment

Re:Why Index Funds Are Like Subprime CDOs by bob33212 on Wednesday September 04, 2019 @01:56PM (#20879718)
A hedge from this theory would be to buy stocks just outside the SP 500? Something like TSLA. That would be a crazy situation, where the SP 500 is crashing and the rest of the market it taking off
[ Parent | on HN ]
Re:Why Index Funds Are Like Subprime CDOs by motbob on Wednesday September 04, 2019 @02:03PM (#20879803)
I don't know about that. If a general financial crisis is the concern, stocks outside the S&P 500 would not be spared.

What I got from this interview was just a reminder that it makes sense not to get caught up in enthusiasm for a certain asset. And investors (including me) are certainly enthusiastic about the S&P 500 index fund.

[ Parent | on HN ]
Re:Why Index Funds Are Like Subprime CDOs by ChuckMcM on Wednesday September 04, 2019 @02:05PM (#20879816)
A simpler option is to buy options on the index. You can butterfly the index with calls and puts around your minimum return / maximum loss tolerance.
[ Parent | on HN ]
Re:Why Index Funds Are Like Subprime CDOs by onaraft on Wednesday September 04, 2019 @02:12PM (#20879894)
Which requires a margin trading account, a non-trivial amount of trading experience, a non-trivial amount of capital, constant management, and is highly leveraged. The risk profile is totally different.
[ Parent | on HN ]
Re:Why Index Funds Are Like Subprime CDOs by AWildC182 on Wednesday September 04, 2019 @06:43PM (#20882108)
This is the right answer, even if it's a fucking terrible idea.
[ Parent | on HN ]