hedge / hedge your bets / hedge fund

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hedge / hedge your bets / hedge fund

Post by Archived Topic » Sat Apr 03, 2004 5:17 pm

I'm looking for examples of early uses of the verb "to hedge" to mean "arrange one's affairs to mitigate risk of loss." I'm an attorney who specializes, among other things, in advising managers of "hedge funds," private investment funds that often take financial positions to mitigate risk of loss.
Submitted by richard schaul-yoder (boston - U.S.A.)
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hedge / hedge your bets / hedge fund

Post by Archived Reply » Sat Apr 03, 2004 5:32 pm

Probably your best bet is to consult the Oxford English Dictionary, which is the most authoritative and comprehensive lexicographical source devoted to documenting the development of the English language.

You can access it online at http://www.oed.com, but for a one-off query it is probably not worth the cost to subscribe; try a library instead, which may hold a paper copy.

Perhaps one of the regular wizzes here who is known to be in possession of a CD-ROM version of the OED will be able to oblige you...
Reply from Erik Kowal (Reading - England)
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hedge / hedge your bets / hedge fund

Post by Archived Reply » Sat Apr 03, 2004 5:46 pm

A Wall, a Hedge... just anything does when it comes to protecting oneself from the Stock Market and its shysters.
Reply from Natalio Elta (Paris - France)
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Re: hedge / hedge your bets / hedge fund

Post by Ken Greenwald » Thu Feb 19, 2009 7:58 am

In yesterday’s New York Times I read the following:
<2009 “There are highly profitable, big-name companies that are leaders in their fields and have no or very little debt on their books and large bank balances. . . . Investing in such companies is ‘a good way to hedge your bets,’ said Thomas H. Forester, manager of the Forester Value fund.”—New York Times, 17 February>
I knew what HEDGE YOUR BETS meant in a general way and guessed that the word ‘hedge’ referred to a barrier (a row of closely planted shrubs, bushes, small trees) against losses. But I thought it might be interesting to see what else I could find:

This question was asked of Johnathon Green (Ask the Wordwizard) many year ago and the very brief discussion may be found at hedging your bets. This topic was also briefly discussed some years ago in another posting and I have here merged my present posting with that older one.

AMERICAN HERITAGE DICTIONARY OF IDIOMS

HEDGE ONE’S BETS: Lessen one’s chance of loss by counterbalancing it with other bets, investments, or the like. For example, I’m hedging my bets by putting some of my money in bonds in case there’s another drop in the stock market. This term transfers hedge in the sense of ‘a barrier.’ to a means of protection against loss [second half of 1600s]
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OXFORD DICTIONARY OF IDIOMS

HEDGE YOUR BETS: Try to minimize the risk of being wrong or incurring loss by pursuing two courses of action at the same time. Hedging your financial liabilities, especially bets or speculative investments, meant limiting your potential losses by also putting money on another outcome, in such a way as to balance, more or less, any potential loss on the initial transaction. In betting terms this specifically means putting money on more than one runner in a race.
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PICTURESQUE EXPRESSIONS by Urdang

HEDGE [ONE’S BETS]: To protect against possible loss by cross-betting; to wager against a previous bet or other speculation in order to lessen possible losses; to equivocate or shift, to beat around the bush; also simply hedge. This expression, which dates from 1672, appears in Macaulay’s History of England. (see 1855 quote below)
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FACTS ON FILE ENCYCLOPEDIA OF WORD AND PHRASE ORIGINS

HEDGE. Hedge, in the form of hegge, is recorded in English as early as 785, referring to rows of bushes or trees, such as the privet or hawthorn, planted in a line to form a boundary. In time the word hedge came to mean a safeguard and by the 16th century writers were using the word as a verb, meaning to protect oneself with qualifications, to avoid committing oneself. Shakespeare was the first to record the expression, in The Merry Wives of Windsor. (see 1601 quote below)

HEDGE WORD: A good story about these common disclaimers of responsibility concerns Mark Twain and his first job as a reporter. Twain was told by his editor never to state anything he couldn’t verify by personal knowledge. After covering a gala social event, he hedged his bets by turning in the following story:

“A woman giving the name of Mrs. James Jones, who is reported to be one of the society leaders of the city, is said to have given what purported to be a party yesterday to a number of alleged ladies. The hostess claims to be wife of a reputed attorney.” [[I love it!]]
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Today I acquired a dictionary that I have been coveting for years and which is a veritable gold mine of slang expressions and quotes. It was originally published in seven volumes during the period from 1890 to 1904. I’ll just include one usage of HEDGE that it provides and one quote (there are many) that gives a concrete example of how one would hedge one’s bets in a horse race:

SLANG AND ITS ANALOGUES by Farmer & Henley

HEDGE verb: 1) To secure oneself against, or minimise the loss on a bet by reversing on advantageous terms . . . [Thus, if a man backs A to win him £100 at 5 to 1, he will if possible hedge by laying (say) 3 to 1 to the amount of (say) £60 against him. He will then stand thus: If A wins he gains on the first bet £100 and loses on the second bet £60, leaving a net gain of £40; if A loses he loses on the first bet £20, and he wins on the second bet £20 thus clearing himself.]
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And, of course, one should always check what the OXFORD ENGLISH DICTIONARY had to say on the subject (included is a sprinkling of their quotes):

8a) HEDGE transitive verb: To secure oneself against loss on (a bet or other speculation) by making transactions on the other side so as to compensate more or less for possible loss on the first. Formerly also with in, off. Also figurative. 8b) absolute or intransitive
<1672 “Now, Criticks, do your worst, that here are met; For, like a Rook, I have hedg'd in my Bet.”—The Rehearsal (1714) by G. Villers, page 31>

<1774 “He . . . contrived now-and-then prudently to hedge in a bet, by which means he soon found himself in possession of a sum which placed him above the abject dependence of a waiter.”—Western Magazine, II. page 583>

<1813 “I kept hedging my bets as I laid them.”—Sporting Magazine, XLI. page 4>

<1855 “Godolphin . . . began to think . . . that he had betted too deep on the Revolution, and that it was time to hedge.”—History of England by C. Macaulay, xvii. IV. page 57>

8c) HEDGE: To insure against risk of loss by entering into contracts which balance one another. Also trans., to operate in (a commodity) in this way.
<1909 I “An important method of shifting risks is ‘hedging’, whereby a dealer, for instance in transporting wheat, may be relieved of the risk of a change of price.”—Elimination of Risk by I. Fisher, page 12>

<1917 “Hedging . . . consists in matching a purchase with a sale, or vice versa; in other words, it consists in making a purchase or sale for future delivery to offset and protect an actual merchandising transaction.” Ibid. “It makes little difference to an elevator if wheat rises or falls fifty cents a bushel, provided its holdings have been hedged.”—Exchanges and Speculation by A. W. Atwood, xiv. page 195 and xiv. page 197>

<1957 “We have drawn the attention of the stockholders to the difficulty in hedging our unsold stocks against a fall in cotton content value.”—The Times (London), 19December, page 16/1>
9) HEDGE intransitive verb: To go aside from the straight way; to shift, shuffle, dodge; to trim; to avoid committing oneself irrevocably; to leave open a way of retreat or escape.
<1598 “Falstaff: I myself sometimes, leaving the fear of God on the left hand and hiding mine honour in my necessity, am fain to shuffle, to hedge and to lurch . . .”—The Merry Wives of Windsor by Shakespeare, II, ii>

<1606 “For emulation hath a thousand sons / That one by one pursue: if you give way, / Or hedge aside from the direct forthright, / Like to an enter'd tide, they all rush by / And leave you hindmost”—Troilus and Cressida by Shakespeare. III. iii>

<1611“Harceler, to haggle, hucke, hedge, or paulter long in the buying of a commodity.”— A Dictionarie of the French and English Tongues by R. Cotgrave>

<1861 “Prophesy as much as you like, but always hedge.”—Pages from an Old Volume of Life: A Collection of Essays (1891) by Oliver Wendell Holmes, page 12>

<1866 “He has hedged with such dexterity upon this point that his clergy must be sorely puzzled to determine how far they may go in ritualistic observances.”—London Review, 8 December, page 623>

<1888 “For a while the miller hedged and dodged, but being pressed hard he finally admitted the truth.”—Blacksmith Voe by Cushing, I. page 245>
HEDGE FUND noun Finance (originally U.S.): A largely unregulated investment fund formed as a private limited partnership.
<1966 “One of Wall Street's little known but highly profitable vehicles for private investors the *hedge fund. These hedge funds are limited partnerships, as contrasted to mutual funds that are open to the public.”—New York Times, 26 November, page 53/5>

<1977 “Howard runs a private investment portfolio—known as a ‘hedge fund’—that has earned more than 1,000% on its original investment in 1969.”—Time Magazine, 13 June, page 47/3>

<2002 “Although plenty of sane men and women run hedge funds, the funds seem to have been designed for manic personalities.”—The New Yorker, 20 May, page111/3>

<2009 “These are dark days for the hedge fund industry. Record losses over the past year, followed by the humiliating Bernard Madoff scandal, have led investors to desert hedge funds in their droves.”—Investment Adviser, 16 February>
And seeing how wonderfully hedge funds have performed as of late, it might have been a good idea for folks to have had hedges against their hedge funds!
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Ken G – February 18, 2009
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