When one takes a look at the performance of the TSX, for example, since March lows, what can often be lost in the discussion is how well gold companies have performed post-volatility. As other sectors declined (and many, such as energy, continue to lag), a significant amount of slack has been picked up by gold companies. Those without gold hedges, or a portfolio inclusive of precious metals companies, missed out on a significant portion of the rally. This is one example of what I mean.
Hedges, such as put options in other trading strategies tied to options, can help smooth out returns overtime. This means in good times, one may only gain 80% of the total upside of a given stock (as an example), but may also only lose 60% of the total loss one may otherwise expect - a worthwhile trade for some.
With more volatility likely on the horizon, I encourage investors to consider such a strategy moving forward.
Invest wisely, my friends.