Today's Word of the Day means...
The practice by which a business or investor limits risk by taking positions that tend to offset each other. For example, a business stands to lose money if the price of a commodity it holds declines, but it can offset this risk by agreeing to sell a specified amount of the commodity at a set price at some point in the future.
Note: Hedge funds, which are investment funds usually open only to the very wealthy, grew in the 1990s. The near failure of one such fund in 1998, Long-Term Capital Management, sent shock waves through Wall Street.
Something that offsets expected losses: People were buying gold as a hedge against inflationverb
(also hedge off) To transfer part of one's bets to another bookmaker as a means of reducing possible losses if too many of one's clients were to win: Big banks use derivatives to hedge their bets on which way the markets are going (1672+)