Buy the Hedge
Posted July 25, 2022
You’ve probably heard of Occam’s Razor.
It’s also called the principle of parsimony. It means that the simplest explanation for any event is likely to be closest to the truth.
You probably haven’t heard of Ackman’s Razor.
It’s a principle inspired by legendary investor Bill Ackman.
It goes like this: Buy the hedge.
Or, short story long…
When you see massive systemic risk in the markets, you have two choices:
1. You can sell all of your long-term investments…
2. Buy a hedge that covers the value of the portfolio.
More often than not…
Buy the hedge.
In February 2020, Ackman did exactly that.
He bought the hedge.
Ackman purchased credit default swaps on indices of corporate bonds.
Or, in plain English: He bought insurance against corporate bond defaults.
At the time, Mr. Market believed that corporate default risk was low…
So Ackman bought this default insurance for a song.
He knew that when corporate bonds plummet, the price of insurance can skyrocket virtually overnight.
This move ended up being one of his biggest trades in his long, storied career.
But, here’s the thing…
Normal, everyday investors are locked out from these kinds of investments. They can’t hedge their bets in the exact same way Ackman did.
That’s because Ackman’s trade required two crucial things:
1. Millions of dollars in capital
2. A legal agreement with a top brass broker like Goldman Sachs
But it doesn’t mean you’re out of luck.
Most aren’t aware of this…
But, there’s a way to make a similar “Ackman trade” straight from your brokerage account.
Our colleague Jim Rickards just revealed it to his Countdown to Crisis readers. It’s one of his favorite ways to pull off an “Ackman Trade” in the face of systemic risk.
And it’s so easy, you can do it from any major brokerage account.
But that’s not all…
There’s a reason Rickards is showing his readers this trade right now.
Rickards explains everything in his latest interview right here at this link.
He gives the where, why, and what.
Where Jim thinks we’re headed…
Why we’re headed there…
And what you should do about it now.
For Altucher Confidential