Protect Yourself from Coming Equity Declines
The stock market has been exceptionally volatile lately. The S&P 500 fell by 10.5% in the month of May only to rebound by 9% through Independence Day. The choppy market action is indicative of the bear market we are in. We have suggested that the developing economies of Brazil, Russia, India and China (BRIC’s) would help pull us through as they develop their own middle class consumers. Unfortunately, it appears that the BRIC’s won’t be able to rescue us from a projected fourth quarter recession, which makes June’s stock market rally a great opportunity to hedge part of an equity portfolio and provide some protection ahead of a global economic downturn.