How Can I Protect My Investments Against Stock Volatility?

Ask the Expert

Damon Geller
President
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Looking for wealth preservation or yield in the equities market certainly must be considered risky given it’s volatility and downswings, not to mention possible failure. So naturally, you’re looking for a way to protect yourself against the volatility of stocks. Naturally, my best recommendation for a great hedge against stock volatility is gold. It’s important to note, gold is not a purchase you make to get rich quick. Rather, it’s an asset you hold so that you don’t get poor quick. Its purpose is to protect against the kind of wealth destruction we saw in 2008 and have seen for 10 years while we’ve run massive deficits. Gold’s main purpose is to act as a wealth preserver and wealth protector. That said, gold has “performed” quite well also. 20% yearly growth on average every year for 11 years in a row is what I would call stellar performance.

Think back to right before the NASDAQ blew up in the late 90s. Everyone owned tech stocks. Tech stocks made up a large portion of people’s investment portfolios, and penetration and participation in them was deep and aggressive. Many people were massively leveraging themselves to buy tech stocks. And how did that work out for investors? By contrast, gold is one of the least risky places you can store your wealth and it has also been one of the least risky places to find yield. You buy gold to hedge the items of perceived performance in your portfolio, but don’t be surprised if gold continues to out-perform most everything else if we keep printing currency, accumulating debt, and spending money we don’t have.