RetireJapan

Deep Blue wrote: ↑Sun Apr 28, 2024 3:06 pm Hedging is not free.

Yes, we know that. But different people have different standpoints and different risks on the same trade, and so have different expectations and hedge requirements or are happy to go unprotected.

If I were in the business of say, air transport, I’d probably be wanting to hedge against adverse movements in the price of jet fuel. And let the speculators try to make money on price movements of jet fuel, and provide me with a liquid market for jet fuel.

In my case with my investments, I’m not really running a business and needing to fix input costs, and I have time on my side. I speculate on currency movements explicitly a bit too. If I did become bearish on foreign fiat currencies and foreign economies, I suppose I might just change my portfolio allocation.

But that’s just me, and indeed everyone has unique individual circumstances.