Posted by Bruce Kahl on November 14, 1999
In Reply to: Hedge your bet posted by Sarah Norman on November 13, 1999
: What does the phrase "hedge your bet" mean? I read it in a book and heard it in a song and I have NO clue what it means. Please help me! Sarah
To "hedge your bet" is to protect yourself against a possible loss.
It is a term used chiefly in the financial markets.
For instance, in times of high inflation or economic uncertainty the experts always recommend the purchase of gold or the equivalent since gold has always risen in price when the outlook is cloudy or unstable. Gold is the classic hedge against a falling market.
If you are a multinational corporation and you're receivables or cash flow is in various currencies you can hedge your exposure to fluctuating currency exchange rates by purchasing various insurance policies.