Hey everyone we kevin here, so the market has been very euphoric lately. There is no questioning that a lot of stocks have had some very incredible gains, certainly if you're invested in the ev sector, if you're invested in a lot of tech sectors, whether that's uh chips like nvidia or amd or enphase or etsy, you have absolutely been killing It the last month and a half even look at end phase. We went from 145 to over 250 you've got roblox that went from the high 70s. You know where it's kind of been bouncing around and rubber banding back to now over 120 on metaverse talk, especially metaverse education.

Oh, it's so exciting, so juicy so fun, but folks markets don't only go up and remember when markets get stretchy with valuations, but people tend to get more excited about investing at highs. I don't like investing at highs. I don't like investing when things are going up. It makes me nervous, because i know that the more things go up very quickly: the more kinetic energy we have, which turns to potential for a fall right without getting into science, which i love, science, i'm not very good at it, but i love it um.

I i want to essentially say that the last few days i've been really thinking about what to do with my portfolio. I've been thinking about uh selling, some stocks to take some profits and uh. The reason i thought about that was uh. I really i'd rather have a little bit more cash, potentially on the side in the event that there is some form of a market dip, i'd be able to uh, have more cash on the side that i'd be able to go use to buy other things, because I like doing that, i like buying the dip, and so i've been evaluating different ways to potentially build cash to buy the dip.

And today i decided to do one and i'm going to talk about that stock strategy in terms of hedging. But i'm also going to talk about a strategy that i'm taking for hedging potential inflation risks. So we're going to talk about both of those in this video. So you want to stay for the stocks.

Part watch this first part and then we're going to talk about hedging against inflation. So first, let's just finish the thought on on hedging the market. The way things are right now, so the first thing that i'm doing is i'm looking at my portfolio and i'm saying what are my some of my stocks that that i think have moved a little bit more on momentum and hype than potentially fundamentals. When i look at a company like enface, i believe that enphase was fundamentally oversold because of supply chain fears.

Batteries are very heavy to ship end phase inverters take a lot of microchips and we've had a lot of a supply crisis and problem with this. This is one of the reasons i was buying end face like crazy and remember every single time i buy or sell something, whether it's a stupid idea or a good idea, and obviously i try to be right more than i'm wrong. That's obviously every investor's goal and this year has been wonderful so far, killing the s p, but here's the thing every time i send something again, whether i end up being right or wrong the moment i do it. I send out an alert to everyone in the stocks and psychology of money group and, if you're not part of it, you may as well join it.

If you watch the channel, you may as well get those alerts as well. Pay once take some of the great attendees that hopefully, you've had over the last few months, join use that black friday code. This is the best code we're going to have through black friday price, goes up black friday night or check out the other programs as well. You can bundle most popular bundle is real estate uh with stocks and psychology of money zero to a millionaire for real estate.

But anyway, i just sent out an alert that i'm issuing two hedges and these could end up going very poorly. But i see them as an insurance policy because they could also end up going very well see. I have two choices for for really hedging. Well, i've.

Actually i mean there are many choices for hedging, but there there are two primary choices that i've been considering right. Now - and the first is just straight up selling some shares. If i straight up sell some shares like matterport at a you know: uh 60, 70 gain or whatever uh then actually yeah somewhere around there uh. Then i would end up paying a substantial amount of taxes.

So, for example, if i have two million dollars in matterport - and let's say i have gains of uh - oh, i don't know 700 thousand dollars. Let's just make a quick example. Okay, i know the percentages don't line up perfectly here. I'm just gon na go with seven hundred dollars, say: there's seven hundred thousand dollars in gains uh.

If i take uh profits, i'm gon na pay, probably 55 in taxes, so uh simplifying the math again every 100 000 of profits. I take out of matterport, i'm only going to be putting in my pocket about 45 000 and i've done that a lot this year with option trades, where i've done very, very well on many different option trades as well as long hold stocks. I try to keep my long hold stocks so that way i can get to long-term capital gains or just never pay taxes, and i have been trading a lot with my options, so i thought to myself well, the last thing i want to do right now is Really collect more short-term profits, uh and pay more taxes, because we're getting to the end of the year - and this is where it kind of makes sense to start being a little bit strategic again about taxes which really you should be strategic about taxes all year. Long.

But there's a little more more of an emphasis that we usually have it towards the end of the year because we're like oh it's the end of the year. We got ta think about taxes again, and so i thought well. If i sell calls against my position, then i might re realize premium, but if i end up getting called out of those shares, i'll pay gains on the shares, because the shares are going to be way up. Even if i get called out i'll pay gains on the premium, so i'm paying double taxes here, either way, which is not so ideal if the market zooms i'd rather not pay any taxes and the way to not pay any taxes is just not to sell your Shares just hold on to your shares right and, if i sell puts then again, i'm taking a premium, which is something that is going to lead me to pay taxes right.

So i thought, okay, what can i do that doesn't involve selling shares to pay taxes, selling calls to potentially pay taxes on the premium or uh? If i get called out the shares and the premium right, what can i do that might be beneficial for tax purposes, while at the same time hedging my portfolio and giving me the opportunity to have cash? If there's a dip see? This is a very, very interesting kind of niche scenario where it's like. I only want extra cash. If there's a dip, i don't want extra cash. If there's no dip, i just want to be fully invested, so i don't really want to sell and sit around with cash twiddling my thumbs because i think we're in the end of the year rally.

This is this is boom time, but i also think things are very frothy and some things have ran up substantially, so i thought to myself. Well, what can i do that worst case scenario? Is a tax write-off doesn't incur me taxes and if the market falls gives me lots of cash potentially and the answer to that was actually buying puts now. Usually, i don't short the market, but think about this when you buy puts, which is a version of shorting the market, when you buy, puts you're paying for an insurance contract worst case scenario, you lose your premium essentially that insurance contract for you shorting the market. Right.

You are forcing somebody else into a contract to promise you to buy shares at a certain price and in return for somebody agreeing to buy shares from you at a certain price, you are paying them a premium, so i am paying money, i'm paying money out. This is a tax write-off to consult your cpa. Okay, i'm not a tax professional talk to your cpa, i'm a dude on youtube who drinks coffee, sometimes out of a level 99 fire making cup, which uh that should raise some questions as well and then, of course, also has a blue grass glass straw to go With this diamond hands, coffee mug and sells programs on building your wealth with a black friday coupon code with prices that go up because of inflation, while also suggesting that in the long run there probably won't be inflation, we'll see deflation, it's just what you're stuck with On the channel here - okay, like i i'm self-aware, okay, so i bought some points. This is method one of my hedging, because there's another strategy for hedging that we're also going to talk about in the second half of this video.

So what did i buy puts on? Well, first, i want to buy, puts ideally on something that, when it falls is going to maintain high volatility, because there are usually you don't want to buy contracts like option contracts. When volatility is high, unless you expect that volatility is going to remain high as prices potentially u-turn, that would be the only excuse for paying a high premium during a high volatility environment uh. And there are two stocks, particularly one that i own and one that i don't own - that i think are really good opportunities to where, if the market crashes, these two stocks are going to absolutely crash and burn and get obliterated if the market does not crash these Two stocks also have the chance of crashing and burning, as momentum evaporates see what i'm doing here like i'm, trying to put all of the odds in my favor, not paying taxes but still want more money. If the market crashes, if the market crashes, i'm gon na pick two stocks that are going to do horribly in a market crash, even if it's like a five percent correction for the s p 500, these two stocks will do horrible they'll be down like 50 60 Percent, if the market does not crash these two stocks still have the potential of being down 30 40 50 percent, because they're kind of momentum, movers one of them.

I really love long term, the other one i don't so a little bit of mixed bag here on both. Let's talk about both of these here, what contracts i just uh fulfilled or purchased, and then let's talk about uh, my second method of hedging in the event that we end up having very high inflation. Now i'm kind of excited to talk about this uh, but uh. Here's the thing i just wan na know that this video or i just want to preface that this video will either age very well or very poorly, and i'm okay with that, because when you buy puts you're buying an insurance contract, let's say these stocks and ma The market overall continue to skyrocket.

Well, if they continue to skyrocket, that's okay, then, in this case i'll have paid 350 000 for a hedge on about a 2.1 million dollar portion of my portfolio and i'll have lost that about 16 percent. But that's okay, because if the market continues to zoom, then i'm probably making 16 percent on two mil uh, which which would more than off offset these puts, even if they went entirely to zero, which i might trade out of them before they ever got. To that point, so this is an insurance policy. If this play does very poorly it's a tax write-off, it was an insurance policy that i didn't need, and it means that my other positions are doing very very well.

Probably if this video ages very well and these positions do very well well, then it's because of one of the two things i said: either the broader market pulled back or these two stocks or one of the stocks lost momentum we'll see, and i don't have to Hold these to expiration as well, but uh. Before i begin, i want to just quickly show you this screenshot from my course member live stream this morning, november 17th lex here mentioned, bought your course as an early christmas present to myself, and it has already paid for itself a few times over. Couldn't recommend it more? Thank you lex for mentioning that during the course member live stream this morning, uh. Thank you.

Thank you very much. Here's somebody else shout out who just bought your course yesterday talks with psychology money looking forward to getting rich now with the little tongue. Emoji awesome, but uh always really really happy to chat with y'all in the course member live streams that we do every day. The market is open check those programs out down below okay now for the contracts.

The first one folks i bought um 250 puts on rivian uh yeah. Okay rivian is down 17 today. I believe that a 17 decline on rivien today has the potential of starting the trader exodus. Okay, this this to me is like if this went down to a hundred dollars, i'd probably get rid of my contract because i think i'll all have succeeded and i i think it would be fair if this sat around like okay, there's there's what i think would Be fair for it to sit around and then what i would actually pay for it.

I would pay 50 for the stock, which i understand is very low. It's below ipo price. I i wouldn't be surprised if it sat around a hundred dollars uh as as uh an overvalued ev play. That's fine, 142 nuts.

So what i did is i bought some uh. Some puts uh and i bought the december puts. I bought them uh for 150, which means they are in the money puts in the money, puts means that i'm already in a position where i could execute essentially and be profitable on them right uh. I bought them for 150.

I paid uh. I don't remember exactly what i paid for them. I want to say i paid like 23 for them or something like that right now, they're at about 27, it doesn't matter so much but anyway, the reason i picked these 150s - and this is the kind of stuff, by the way that i also teach in the Stocks and psychology of money group uh - we had a little more open interest here, so the spread was more narrow, you'll notice, there's about between the bid and ask there's about a 40 cent spread right here right here. You've got an 80 cent spread here.

You've got a 30 cent spread, but i went for the 150s because i was really only paying three dollars more for having five dollars of protection. So i was, i was okay with that uh. In addition to obviously looking at the historic volatility charts and all the other good stuff, this to me was an ideal contract, my breakeven's about 123 330, something if i end up holding these to expiration. I believe that rivian has a good chance of falling substantially if the market slows down like if we start having two or three red days, because jerome powell ends up getting the boot or whatever rivien's gon na get obliterated.

And if we end up having green days in the stock market, i still think rivien has a good chance of falling. So that's why i bought 250 put contracts would basically enable me to force somebody to uh buy. Let me make sure, was it? Was it 250? Maybe that was the other one that was 250 hold on whatever it was. I paid about hold on i'll i'll.

Just tell you exactly what it was really quick, because i think maybe it was the other one that did. I did 250 on so um, which we'll talk about the other stock as well. In a moment, the other stock by the way, is one that i own. Okay, so i did here.

We go rivian, okay, so rivien 150 puts and then we'll go through the other one in just a second. Ah here it is okay rivian. I did a hundred, i'm sorry 100 on this and 250 on the other. Sorry.

So a hundred puts on this one. So a hundred puts means at 150 times 100 shares. I could essentially force somebody to buy 1.5 million dollars of rivian at 150 a share, and i paid about what like twenty three dollars. I'm sorry i paid 26.39 for that right.

I should have looked at that. First, but anyway i paid 26.39 for that right, uh, which is you know about a buck off from where it is now uh. So it's already a little profitable, but big deal little day swing like this, i'm not so worried about i'm looking for more of a larger move over the next couple weeks. Now, the next one that i hedged with was actually one.

I love and i have about two million dollars in this stock and i bought 250 250 contracts of 30 dollar strike puts in matterport, and the reason i chose 30 puts is again they're in the money puts because we're sitting at about 29.69. I do think there is a chance that a momentum will start fading a little bit from matterport and as traders potentially exit once we you know, maybe stop talking about the metaverse as much if it zooms that's. Okay, i've got three times as many long shares than i do hedged positions. Basically, via these, these put contracts uh and uh.

For me, the thirty dollar put was the cheapest. It was one that had a very, very tight spread. You could see the spreads about 10 cents, which is very, very good uh. You know.

Sometimes you go over here and you're like that's. There's a yeah. Actually, you've got actually pretty good spreads here on on matterport for here's, a 40 cent spread. Here's a 30 cent spread so 10 cents pretty good.

Here's. A 15 cent spread this one's only at a five cent spread the 22.5, but anyway uh. So i went for the 30 to get in the money. Put i did 250 of these, which protects me of about.

Let's do the math here. I think it's 650 thousand dollars 250 times 100 shares times. 30 is uh. 750.

000., that's 650., so uh. But anyway, that is my second hedge and it is a put on matterport again. This is one that i think if the market crashes it'll fall hard. If the market doesn't crash, it could still fall, but if it doesn't i'll make money on the long position now, i don't have a long position on rivian, but i think if rivian keeps zooming and it goes to like 170, 180 again and then zooms over 200.

I think at the same time, we'll probably also see tesla, which is my primary ev play skyrocket, because if, or vice versa, maybe tesla will go to 14 1500 and rivien goes to 250, in which case that put contract will get utterly burned, but i'll be making Money on the ev sector, having euphoria so really again, the whole purpose of these puts is to create money when and if momentum fades in companies or sectors that i'm invested in or the market has some sort of substantial pullback and sudden pullback. Now, my second hedge - and this is this - is a very different style. This is a little bit of a longer run hedge, and this is in the event, i am wrong about inflation, which i believe that at some point within the next year or two before we start substantially raising rates, i believe that inflation will inflict down. That doesn't mean i'm a chill for the fed.

That doesn't mean, i believe everything the fed says. I don't. I just believe that uh commodity prices are in a 200 year down cycle that down cycle will continue, lumber prices will come down, input costs will come down. I believe, as a business owner that when businesses go through stress and issues, they become very innovative at making sure that in the future they never have those problems again, because companies don't like stress or problems, they like efficiency, and so i think we are going to Be greasing the wheels of corporate america so strongly through this this test, through this disaster, through the supply and labor and shipping crisis, that we will end up having extremely well greased and well-oiled corporations come 2022 holiday season, and i do believe that inflation has a very High likelihood of falling, however, i'm not stupid, and i know that i don't have a crystal ball and that i could be wrong, and so i am hedging myself by making sure that i maintain a very strong interest in buying real estate.

Now i know that doesn't sound very sexy to everyone, but i am open to multi-family apartments, probably multi-family apartments. I would follow what i talk about in my zero-to-millionaire real estate. Investing course i'd be looking for, ideally below market rent but newer units. Alternatively, i will look for fixer-upper single families.

I generally don't want fixer-upper multi-family they're, very different market inefficiencies and you're dealing with very different classes of investors, and so you have to understand the opportunities in different real estate markets and they're very different between single-family multi-family. This is why single-family multifamily investors don't tend to get along because they have totally different mindsets and that's okay. I just realized they're different forms of investing which, by the way, if you ever potentially want to invest with me, go to medkevin.com cash flow and fill in your info, medkevin.com cashflow and invest with me so anyway, uh real estate uh. Ideally, if you can buy multi-family or some sort of investment property before the end of the year, talk to your tax professional, but you might be able to take advantage of some special cost.

Segregation benefits to reduce some of your tax exposure as well. Prior to the end of the year now, how is real estate a hedge well consider this? Let's say you have a million dollars in real estate and eight hundred thousand dollars of debt and the rent that you're getting is six thousand dollars per month or about seventy two thousand dollars. Seventy two thousand dollars divided by eight hundred thousand dollars, is about nine percent. So you're getting about uh nine percent in rent every single year, gross numbers here versus the debt that you have right well, if we have inflation first of all, we expect that interest rates are going to go up.

That is going to hurt resale values quickly. So you cannot short term use real estate to hedge against inflation. You'll get screwed short term. Do not use real estate as an inflation hedge, because, if rates go up, prices will fall quickly, but i invest in real estate for the very long term like i do not trade real estate, because real estate is very expensive to trade and because it's so expensive To trade and so hard to trade, i don't really trade real estate.

I keep my real estate, so i don't really care what happens with values, but i still want to use it as an inflation hedge tool, which i can because here's what happens? Let's say we have substantial inflation and i'm wrong about inflation. We get substantial inflation now, all of a sudden that 72 000 of rent goes up by, let's say uh 30 over the next three years or 10 percent. A year-ish should be a little more because of compounding or whatever well now, my expected uh rent for the property would probably be somewhere around at least 20 000 more so somewhere around uh, 92, 93, 000, 93, 000 versus the 800 000. I have means i'm now getting about 11.6 percent of my total debt and gross rent, which i just boosted how much money i'm now able to use every single year to pay my debt off and because my expenses are mostly fixed because principal and interest stay constant And property taxes move very slowly and so does insurance.

They move very, very slowly. I'm going to be able to use that extra money and pay that debt off much much faster. So i basically inflated away the debt, and the tenants who are getting screwed by inflation are now paying that property off for me faster. So this is how inflation can actually help.

You pay off your real estate debt as a real estate investor faster. Now, if you're a tenant, you want to become a real estate investor or your real estate investor, and you want to expand real estate programs link down below, don't be a tenant forever. Keep in mind. I do have about 42.

Of my total. Around 50 million portfolio invested in real estate. These are my two large hedges for the next really 30 45 days of the year that we have left uh. This is uh.

This is my thought: i'm still very bullish on the market, so i don't want anybody to just well. I mean it's going to happen. People read the title and they're like yeah, like i missed your fud. It's like i'm pretty sure, i'm pretty bullish on this market.

Uh, you know we're just talking about like the fringe here, but whatever uh sucks for them, they never gain insights when they just jump around videos, it's their loss. So anyway, thank you for making it to the end of this video. If you found this helpful, consider sharing this video, we will see you in the next one thanks again and goodbye. You.