Higher Rates Create Opportunity for Hedging
Broken Pie Chart · Broken Pie Chart
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Show Notes
The rise of interest rates has been all over the news, but is there a silver lining? Yes, due to higher rates in short-term US treasuries hedged equity strategies now can further manage risk by substituting out short duration high yield to short term treasuries. ZEGA Financial CEO Jay Pestrichelli and Derek Moore are back to explain how a flagship strategy Buy and Hedge is leveraging the new environment.
What are Buy and Hedge strategies?
Comparing the risk profile of short-term US Treasuries vs short-duration high yield bonds.
Comparing risk profile of treasuries to corporate bonds
Explaining the yield to maturity on bonds
Where a return comes from in a bond
Coupon payments(interest) vs appreciation to par
Interest rate risk in bonds
Duration as a measurement of how market values change for every 1% change in rates
How Buy and Hedge has limited risk in buying long call options and US treasuries
Mentioned in this Episode:
Why hedging is the answer for investors https://podcasts.apple.com/us/podcast/why-hedging-is-the-answer-for-portfolios-can-hedgers/id1432836154?i=1000578323267
Margin Call Movie and Value at Risk Explained https://open.spotify.com/episode/2XJ58KAoQKw2sdC48KHyPp
Derek Moore's book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr
Jay Pestrichelli's book Buy and Hedge https://www.amazon.com/Buy-Hedge-Iron-Rules-Investing/dp/1087941849/ref=nav_signin?_encoding=UTF8&qid=&sr=&asin=1087941849&revisionId=&format=4&depth=1
Contact Derek [email protected]