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Let me paint you a picture: Imagine your house, safe and sound. You want to insure it, so you buy a policy and pay regular premiums on it. Of course, if the unthinkable happens, you're covered.
Now imagine you've got no policy, and, one day, your house is starts to burn... You desperately call Allstate or Metlife to find that a policy is getting way more expensive with each passing second (though, I'm pretty sure no insurance company would write a policy under those circumstances).
The thing is, millions of people who wouldn't go a day without homeowners' insurance balk at "insuring" their portfolios with proper, inexpensive, and proportional hedging. Then when the "fire" starts, they're either paying through the nose... or going without.
In fact, this very subject came up just the other day on my Markets Live stream, and by the time we were through with the session, we were all a lot smarter - and better protected.
And the timing is good: The next leg down may have already just started...
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About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Penny Hawk. He also contributes to Money Morning as the Quant Analysis Specialist.