hedging techniques Quotes

In our view, derivatives are financial weapons of mass destruction carrying dangers that, while latent, are potentially lethal.

With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.

"You need hedges.""Hedges," I said, bemused. "Yes, Edgar." He looked surprised and a little disappointed, as if I had failed to understand a very simple concept. "Hedges against the night."

The world of derivatives is full of holes that very few people are really aware of. It's like hydrogen and oxygen sitting on the corner waiting for a little flame.

I think margins will be destroyed for a bunch of people. If that's true, then it will be good to have alternatives to hedge against that eventuality.

Common hedging techniques include shorting stocks, buying put options, writing call options, and various types of leverage and paired transactions. While I do reserve the right to use these tools if and when appropriate, my firm opinion is that the best hedge is buying an appropriately safe and cheap stock.

I don't think that hedge funds are bad per se. I think they're just one more financial tool. And in that sense, they're useful.

If you write what you know about, you will always be on safe ground. I am very edgy and nervous about going into territories I know nothing about. That's why you don't find much high finance, group sex, or yachting parties in my stories.