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by failbuffer 585 days ago
This is the Hacker News community. Let's be constructive and civil. Your comment would have more interesting and relevant if you had explained why this trading strategy is a bad idea instead of just labeling it as "idiotic".
1 comments
Dalewyn 585 days ago
I'll bite, I guess:

* In deferrence to Boglehead philosophy, hedging bets is a fool's errand because the idea is you lose your money the more you touch it. Make a plan, invest, and then hold hold hold staying the course come hell or high water.

* If you truly want to reduce or eliminate risk, the best way is to simply cash out. A $1 bill will always be a $1 bill with absolute certainty.

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sodality2 585 days ago
As a boglehead... that's just not how it works in the real world. Some people would treat the loss of $X worse than the gain of $X is good. Thus, they don't have linear value for money (no one really does... if you lose 90% of your bank account, you still have dinner tonight; if you lose all of it, you might not).

Some people want to come out neutral or lose a guaranteed small amount, rather than the chance to lose or gain the same amount. I'd pay $5 to avoid having to flip a $10k +/- coin. Thus, if I knew I would lose $10k if X got elected, I could place a $10k bet for Y to win.

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JumpCrisscross 585 days ago
> Some people would treat the loss of $X worse than the gain of $X is good

Most people. "Loss aversion refers to a cognitive bias in which the same situation is perceived as worse if it is framed as a loss, rather than a gain" [1].

> I'd pay $5 to avoid having to flip a $10k +/- coin

Risk aversion. Seemingly related, but in fact quite rational.

[1] https://en.wikipedia.org/wiki/Loss_aversion

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s1artibartfast 585 days ago
There are bad hedges and good hedges.

It is commonplace to take various financial positions that limit downside. It is one of the primary uses of options and futures.

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TeaBrain 585 days ago
>I'll bite, I guess:

> In deferrence to Boglehead philosophy, hedging bets is a fool's errand

The flagged comment didn't say that hedging was idiotic, but implied that the specific hedge mentioned was idiotic, yet didn't give any reason for calling it such.

>$1 bill will always be a $1 bill with absolute certainty

This is money illusion.

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