Objective : To develop a portfolio of assets that can not only withstand but can benefit from market corrections .
Market corrections / downturns when wealth is destroyed ... market values gets eroded, companies get bankrupt , job market worsens . Non of these on the face of it look like great money making opportunities !!
So how to go about making money when volatility increases . Some of the investments I can think of are :
1) Buy a lot of put options on all those assets that are expected to collapse.
2) Sell in the money call options and collect the premium , that will anyway expire worthless as the market falls.
3) Hold a lot of cash/ liquid assets to buy assets when everyone sells.
However some of these are high risk / high return strategies . Derivative positions has be always monitored and stop loss maintained .
However the point is we should not always invest and then hope that the market keeps going up !
We cant keep blaming our bad luck when we loose money and pat our own back when we make money ! We all ask Why Me!
We need to build some robustness in our investments .
Indian markets is set to fall along with other asian markets .INR looks weak and all set for 68 levels.