Hedging

As the market marches on and ever upwards, we've to start thinking whether to cash out some profits or to ride it further. I've posted here that STI shows signs of weakening already, so it's always prudent to take some profits off and to have more cash in hand to snap up good bargains when the correction comes in. This is to hedge your opinion in case they are wrong.


1. If the market goes up, you'll still have some stocks in it to ride the uptrend.

2. If the market goes down, you'll have some cash in hand to seize the opportunities offered.


You'll notice that either the market goes up or down, there's always something to cheer for. I think that is the ultimate emotional state in the market - you don't really care if it goes up or down. You'll also notice that by hedging, we will not gain as much as we possibly could, neither would we lose as much as we possibly could. That's the point - we don't want extremes.




I think this advice applies to life as well. It's good to hedge your life in case it didn't turn out to be as planned. You know, we tend to think years ahead to plan for the future. We want to reach financial freedom by a certain age so that we don't have to work anymore and can enjoy our retirement. But what happens if that doesn't happen?

I think we have to take small 'profits' along the way in case the longevity of our lives are overestimated. While you are working towards that dream life of yours, do remember to live a life and enjoy the little things. We live once and it's regrettable if we didn't experience as much as we can.

I'm really just advising myself here, being such a workaholic.