Posted by ESC on November 14, 1999
In Reply to: Hedge your bet posted by Bruce Kahl on November 14, 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.
TO HEDGE A BET. "Why You Say It?" by Webb Garrison (Rutledge Hill Press, 1992) has this explanation for the phrase: "Hedge. Throughout much of northern Europe, early farmers planted bushes and shrubs to serve as fences and boundary lines. Anglo-Saxons were partial to hawthorn, a row of which they called a 'hege.' It was a mark of caution to plant hawthorn around a field, or hedge it. Eventually the name of the barrier came to be used in connection with many kinds of safeguards. As a result, we say that a person who wagers on several horses rather than only one hedges his bet. Many a person manages to hedge by avoiding direct promises and unqualified commitments."
Stuart Berg Flexner, in "Listening to America," (Simon and Schuster, 1982) says, "Though the first European stock exchange was established in 1531 in Antwerp, Belgium, not until the period of 1620-1700 did English merchants and bankers begin to develop our modern stock market terms. During those eighty years before 1700, 'bond,' 'broker,' 'dividend,' 'to hedge,' 'securities,' 'share,' 'stock,' and 'trader,' took on their financial meanings."