5 Simple Hedge Strategies for Volatile Times

BOSTON (TheStreet) -- Given the wild ride investors have faced since 2007, many are searching for ways to mitigate risk and keep volatile market forces from wreaking havoc on their finances.

Many such strategies have typically been either stunningly complex or locked within the domain of billionaires and mammoth institutions. Alternative investments (through an endowment-styled approach), forward contracts, swaps, options, derivatives and futures are among the weapons in a hedge fund's arsenal.

You don't need to be a hedge fund or multibillion-dollar institution to protect against market forces.

But what can the average, retail investor do if these options seem either too expensive or complicated?

The first bit of advice offered by Ernie Dawal, chief investment officer for wealth and investment management for Sun Trust Banks(STI), is to understand that "average investor" is a misnomer.

"Everyone is going to differ in terms of their financial objective, their tolerance for risk, their desire to avoid taxes and their general knowledge of, or interest in, the financial market," he says. "Some of them are going to want to beat the Joneses; others want to be the Joneses."

Hedging, for most, is really "just a form of insurance," Dawal explains, and like any insurance, "it's important to know what the risks are that individuals need to hedge against or insure against."