morph366

Income in a Zero-Rate World

In relation to your first strategy of holding high dividend stocks and then hedging against the stock prices falling I think you underestimate the task of protecting yourself. You say "The problem with hedges is that markets don’t always go down, nor do they always go up " which is unquestionably true. The real problem however is calibrating the appropriate cross-correlations and beta values etc between your long holdings and whatever your hedge instrument is. One can measure the correlations, beta values etc from historical observations but there is nothing necessarily predictive about those values. Even the best conceived hedge ratios and strategies can go awry so I would be a little less confident about the free lunches.