A hedge against the potential downward market

The stock market is a roaring bull and has reached to its all time high again. While it is very difficult to fight against the bull run, just keep in mind there are tons of warning signs that this is a very dangerous situation to blindly chase hot stocks. For seasoned investors, it may also be a great idea to have some hedges against the downside.

Salesforce (CRM) used to be the Wall Street darling in the past few years. It has got a ridiculously expensive valuation when everyone was chasing it up. But lately in the past few weeks, CRM could not get the steam and even could not rally when the overall market was marching higher. This is a big warning sign that this stock may have finally run to its end. Its price chart has shown a text-book bearish Head & Shoulders. I bet CRM will plunge in the next few months. If you buy some put options for CRM and if it indeed goes down, you can make some money. I bet, if the overall market goes down, CRM will be among the first stocks to go down with it. This is one way to hedge and protect your portfolio. Even if the overall market is doing fine, I still think there is a good chance that CRM will plummet further before finding its bottom.