gcgang
Thinks s/he gets paid by the post
- Joined
- Sep 16, 2012
- Messages
- 1,571
I let a guy from a wirehouse take a look at my stuff. While I've got kind of a mish mash of individual equities and a few funds, I mentioned the Warren Buffett quote about putting it all in index funds for my heirs.
He replied,
"The only thing I would add is for you, and the girls with the Buffet idea, put a 5% Mid-Term VIX Index on (permanent) and another 5% VIX Index on (timed) when market down drafts occur. This will moderate high equity bias. This collar is cheaper than options, but needs rebalanced weekly, when put on."
I understand the VIX measures expected volatility, but I don't fully understand how investing in it works. Can you just establish a long position in an ETN with the intention to sell at a gain, short term I assume, if the VIX goes up when the market goes down, as it has historically?
Not that I'd do this. I understand the guy is throwing out jargon to impress/ confuse me. And I also understand this is market timing disguised as hedging/ portfolio insurance. But still, I'm interested in ways of reducing my risk and was looking to this experienced forum to better understand. Thanks in advance for your help.
He replied,
"The only thing I would add is for you, and the girls with the Buffet idea, put a 5% Mid-Term VIX Index on (permanent) and another 5% VIX Index on (timed) when market down drafts occur. This will moderate high equity bias. This collar is cheaper than options, but needs rebalanced weekly, when put on."
I understand the VIX measures expected volatility, but I don't fully understand how investing in it works. Can you just establish a long position in an ETN with the intention to sell at a gain, short term I assume, if the VIX goes up when the market goes down, as it has historically?
Not that I'd do this. I understand the guy is throwing out jargon to impress/ confuse me. And I also understand this is market timing disguised as hedging/ portfolio insurance. But still, I'm interested in ways of reducing my risk and was looking to this experienced forum to better understand. Thanks in advance for your help.