Volatility As an Asset Class
1/1/2010 2:04:48 PM
From The Zen Investor online edition

It may seem strange, but volatility is actually an asset class.  The reason this is so is because there are ways to invest in the volatility of the stock market.  If you believe that the stock market will become more volatile in the future than it has in the past, you can make a bet on that belief.  Conversely, if you believe that the recent financial crisis is mostly behind us, and that the stock market is more likely to remain calm in the future, then you can make a bet on that belief as well.  We use Volatility as a way to diversify our model portfolios, and also as a way to hedge our investments in stocks in case things get more bumpy than we anticipate. 

For a detailed discussion of how to invest in volatility, become a Premium member and see our detailed model portfolios.  If you want to learn how to trade the more advanced asset classes like volatility and other non-traditional investment vehicles, consider Advanced Coaching where you will receive personal, one-to-one training in the finer aspects of warrior investing.