Tuesday, June 3, 2014

Nouriel Roubini: How to protect your portfolio

If you’re an investor in this low volatility environment, then buying insurance against tail events such as a 10-20 percent correction in U.S. and global equities is reasonably cheap. So, you would buy insurance if you’re concerned about this risk materialising and you can then get the reassurance.

If you worry about China hard landing - and that it could have a negative implication on commodities, like copper and others - then buying options against those kinds of risks is something one can do relatively cheaply.