I have been asked numerous times. Why is the stock market rallying when the global economic situation remains pretty much in ruins? Against the backdrop of the second wave of COVID-19 spread which has resulted in some US states reversing some of their re-opening decisions, should economic normalcy be the base case scenario for 2H20?
That seems to be what the global stock markets are currently implying. While I have been equally caught off-guard by the swift rise in global stock markets, I believe it makes some sense at the current stage to deploy certain hedges in your stock portfolio.
In this article, I will be highlighting the 5 levels of hedging. But before that, a quick look at the disparity between economic reality and the stock market.
