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Big Tech is hiding $1.65tn in off-balance-sheet AI debt (thenextweb.com)
submitted 3 months ago by to c/technology@lemmy.world
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[–] 4 points 3 months ago (2 children)

Yep hedging would work .

But why do you need to be rich to buy a hedge? A leveraged option can be bought starting from a few dollars.

The issue is not getting the hedge, it's getting the timing right. Plenty of people saw the GFC crash coming and invested in hedges, but they were too early and lost a bundle.

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  • [–] 2 points 3 months ago (1 child)

    well if you're rich and you lose a bundle it wont be a big of a deal, that's why.

    hedges are risky, and it's much easier to take risks if you have a large cushion to fall on when you fall.

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  • [–] 1 point 3 months ago* (last edited 3 months ago)

    Those are reasons why loses aren't as big of a concern for rich people. Not why hedges are only for rich people.

    The cost of a hedge is proportional to the assets being protected. If someone has say a $10,000 portfolio of stocks, and they think the market will crash in the next month or two, they could buy a protective option hedge for around $100. And if someone has a portfolio of $300 million, they could hedge for ~$3 million. Wealth is irrelevant.

    Also hedges aren't risky. They reduce risk. They're insurance.

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