Having the right information is like having the key to a volt full of gold in it. Sometimes this information may be psychologically positive or negative in nature, it depends. In this blog, we are focused more on psychologically negative news and how we can protect our investment from it? Sometimes we call negative news black swans as well.
This is the powerful theory proposed by Nassim Nicholas Taleb. You can download the audiobook for free by using this link if it is your first time signing up for audible
Here are 5 tips to protect your investment during back swan news
- Have stop loss on your portfolio
- Use 20% of your portfolio in hedging
- Once your money is liquidated from the stop loss trigger, you can use this money to short equities or buy put derivatives
- At the end of the crisis don’t forget to reinvest your money to build your portfolio.
- Diversify your portfolio with fundamentally good stocks
The bottom line is, you need to have a plan. And what do you need to do with your investment during the world crisis?
Having vertical knowledge on the subject will help in anticipate and negotiate the investment prices. You can read about vertical knowledge in my previous blog T-shaped learning model.