alt Hacker News> What do you think the cost would be for protective puts per $1M of equity exposure of a portfolio on a monthly basis? "Bubble Insurance" if you will.
I expect that would not be a cost-effective way of attaining the risk profile you'd be looking for.
I expect there won't be a more cost-effective way of managing your portfolio risk than by simply adjusting your split of broadly-diversified equities vs bonds.
My homeowners insurance isn't "cost-effective" either but I still do it. I think the reason that investors don't is because they are greedy or irrational or both.
That was the message that I got from a financial podcast I listened to a couple weeks ago anyway.