Hedging Costs Are Too High to Bear

Americans love insurance. FEMA is paying to rebuild beach houses ruined by Hurricane Sandy. Allstate, State Farm and Geico will replace the car you accidentally totaled. Aflac will cover all your bills if you are too badly injured to work. Airlines such as Southwest (LUV) regularly hedge jet fuel prices, just as Hershey (HSY) plays with cocoa futures.

Does it make sense for you to buy portfolio insurance that will pay off if the market drops 5% to 10%? Before answering, let's look at the math....496 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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