Hedging is a popular strategy for reducing risk and keeping a business alive, among other things.
The only perfect hedge is in a Japanese garden.
Gene Rotberg
Fortune, March 7, 1994, p. 53
Hedging is the tai chi of trading.
Hedging is as essential a tool in real estate development as shovels and bulldozers.
There's no such thing as "zero risk."
(Salomon trader Marc) Freed recalls a visit he paid on a large California thrift manager who had been overexposed to Wall Street influence. Freed actually tried to convince the thrift manager to calm down, to take fewer outright gambles on the market, to reduce the size of his positions, and instead to hedge his bets in the bond market. ‘You know what he told me,' says Freed, ‘he said hedging was for sissies.'"
I think the theoretical problems in risk management do not pose major difficulty to firms. Keep in mind that we have seen substantial market volatility in the last few years and that, by and large, firms that wanted to be hedged experienced reasonably low revenue volatility.
The markets will follow the path to hurt the highest number of hedgers. The best hedges are those you alone put on.
Over the past few years I have become increasingly convinced that one of the greatest incentives to hedge is to meet preset budgets so that management can collect their bonuses.
It is often said in the derivatives business that "you cannot hedge history."
Too many end-users come in thinking 'How can I make millions of dollars?'
I gave a speech recently to a group of regulators and the question
at the end was: did they win? But that is not the point. It's
really hard to get through to end-users that the point is not to win, it
is to hedge your risk.
Geoff Considine
Risk Professional, July/August 2000, p. 21
It seems that most farmers start speculating after two years or so of hedging.
Bernard Bonekamp
Futures, January 2001, p. 86
Last updated: January 9, 2011