Vineer Bhansali in his book Tail Risk Hedging makes some claims regarding portfolio protection:
- For losses of 0% to -5%, just diversification
- For losses of -5% to -15%, alternative betas (momentum)
- For losses of -15% to -25%, explicit put options
- For losses of -25% and bigger, cash
However, he doesn't clarify how exactly cash protects a portfolio against losses. What he meant to say was just to buy the stock when the price is low? I just can't see how this could protect against the loss. Any help would be appreciated.