He was talking about a recession. Which might happen. (since people feel like it is getting closer)
If you know a stock which actually goes up in a recession, please let me know!
If you know a stock which actually goes up in a recession, please let me know!
No one knows what's going to happen...
You can go with Dalio's claim that as long as you have 10 hedges that are sufficiently un-correlated, your risk is incredibly low. But even that might not hold up under future unknown conditions.
However, options contracts are a form of derivatives, meaning they are contracts financially engineered to hold a specific correlation. So, you can build perfect hedges using options contracts, which is what they were originally invented for. People just started betting on the markets with them, which created all kinds of risks in the market.
You just need to make sure the instrument you are betting against is representative of the overall market.
And what instruments are you actually buying? Are there put and call options for CoreLogic Case-Shiller???
They are not traded OTC and thus would not face liquidity problems like the OTC instruments people couldn't offload during the GFC (specifically like those guys in the Big Short).
As far as what the instruments actually are: they are puts on broader market REITs/ETFs as well as localized ones. We cannot name the specific instruments as we do not want their prices being bid up.
Hope this clarifies and of course happy to answer any more questions you may have!