Were you caught off guard by the recent wave of selling that swept across Wall Street? Did it leave you with unexpected losses? It might be time for some correction protection.
It seems talk of a correction seems to be picking up steam.
Only one day ago TD Securities strategist Stephen Koukoulas told CNBC.com, “our hunch is that the stock market will have a significant pullback in the next six months.”
Investment strategist Subodh Kumar told us he expects a 10 to 15 percent correction in the nearer term. And on Fast Money, the founder of hedge fund T2 Partners Whitney Tilson revealed a substantial number of short positions based on a similar belief. Considering Thursday's market action all these guys may be onto something.
If we're about to embark on the next leg lower, how should you protect yourself?
If you’re in a stock, make sure to also buy puts for protection.
Gold in a portfolio is classified as an alternative investment and I like it as protection. Or put on a pairs trade. For example sell regional banks and buy capital banks against it.
I’d buy puts in the IWM for protection on the downside. And I also like gold as a hedge.