Hello. It would be nice to hear from some ET members of what stock market protection they have such that, God forbid, a tragedy/accident occurs in the US. The recent arrest of 6 men in NY plotting an attack, North Korea, etc., I think the risk is real. Surely though, you can't live your life in fear. But, outside of puts covering long stock, what other methods are there to protect yourself? ESPECIALLY, if an attack occurs outside of market hours? For example, would it be wise to have a mobile phone with connection to your broker in order to short the futures market? I am not sure if any amount of hedge could protect your whole position, unless you have tons of dry gunpowder. Another thought, what type of risk is there to the financial 'electric grid'? How hard would it be to request a withdrawal from your broker and receive it in a timely fashion if an unfortunate event occurs? I'd hope to hear from you guys some ideas. Thanks.
the short & easy answer is that if the unthinkable happens... you are SOL besides what you mention, having a broker on speed dial to liquidate your positions at the first sign of trouble... even then there's no guarantees that you'll get your wire transfer... & that your currency will be worth anything if/when you DO get it. if something 'major' happens outside of market hours, i would think diversification in different sectors might offer some protection.. if financials open way down, maybe your health & mining sectors open way up.
if you happen to be trading pairs and are market neutral, you may even end up making money on the hideous situation counting your shorts are killed more than your longs. this is a good thread on one type of pair trading: http://www.elitetrader.com/vb/showthread.php?threadid=134253
I know it isn't sexy but I try and always be hedged (sometimes too creatively which can be a problem). The only times I have really been hurt have been when greed/ego won out and positions were left uncovered.
It's like earthquakes, you have to have things in place ahead of time. I've been in earthquakes, people tend to run around and make incoherent sounds, it doesn't work at all.... Options have to be the best, well... option, I'm pretty sure, for protecting your account unless you are completely hedged all the time. I don't think most directional daytraders are hedged at all. When the SHTF you need to have cash in your house, and water.. etc...
If you are a true investor then you should do absolutely nothing, since another 9/11 will not significantly affect the intrinsic value of a diversified portfolio. If you are a trader, then it should be part of your contingency planning, but no one with prudent leverage will do anything other than take an acceptable albeit somewhat painful hit to capital. The loss the US market suffered after 9/11 was less than many of the weekly let alone monthly declines that have been experienced during normal bear markets. For intraday traders, if you prepare properly then you should be able to make huge returns in 9/11 environment and the following days/weeks.
Quoting Neo "Guns, lots of guns" Geoff ===== aka Cajun Sniper Trader/Administrator http://PureTick.com