[loftyai]

Sorry that the post wasn't as clear. My intention with that line was to walk people through the process step by step.

Of course, we engineer the product so that we can pay people back. But I wanted to show people our thought process, which is what happens if there was a recession and most of our portfolio declines by more than 20%. If we didn't have hedging instruments, we wouldn't be able to pay people back.

Therefore, our next step was to purchase hedging instruments for every contract we take part in. Hope this clarifies things. If not, let me know, and I'll be happy to elaborate more.

[rubyn00bie]

Are each contract's hedging instruments independently hedged some how? I read that you invest in markets that "go up" if housing goes down, but let's take the 2008 financial crisis how do you defend against a rolling collapse? Are the markets you're betting in truly independent from each other? How much failure in the markets can you weather? Copious amounts of secret sauce?

Seems like an awesome idea in principle...