- #1
dmatador
- 120
- 1
I hope someone will give me some of his/her time and help me understand this--and given the platform, I'd say the more math in your explanation the better. I am having some trouble understanding a particular type of hedging ones investments: say that company X is going down the tubes and you decide to short some bonds of company X. But, perhaps, to hedge your investment you also buy long some shares of company X. What is the benefit of doing this? My thinking is that you aren't really gaining anything, unless you pick a calculated time when the company is on the rise or continuing to fall and decide to drop the appropriate investment. Does this make sense to anyone? Please, spill your knowledge onto me.