Exotic Bets to Hedge a Portfolio

New York Times – When the global markets plummeted after Lehman Brothers declared bankruptcy in September last year, a handful of alternative investments remained stable or even made money for investors. Among them were “managed futures,” which are not for everybody.

Managed futures use computer-driven trading models that can go either long — that is, betting on rising prices — or short, betting that prices will fall, in a variety of futures contracts.

Under Securities and Exchange Commission rules, an individual investor typically needs to have a net worth of at least $1 million or a certain level of income to put money into anything regarded as an alternative investment, which are generally less liquid and more risky than conventional investments like stocks and bonds.

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