{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,10,14]],"date-time":"2026-10-14T14:51:20Z","timestamp":1791989480506,"version":"4.4.0"},"posted":{"date-parts":[[2026]]},"group-title":"SSRN","reference-count":0,"publisher":"Elsevier BV","license":[{"start":{"date-parts":[[2026,1,1]],"date-time":"2026-01-01T00:00:00Z","timestamp":1767225600000},"content-version":"unspecified","delay-in-days":0,"URL":"https:\/\/www.uspto.gov\/ip-policy\/copyright-policy\/copyright-basics"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":[],"abstract":"<jats:p>Why do balanced portfolios lose protection when they need it? This article synthesizes theories of economic memory, endogenous laws, and feasible risk transfer to develop hedge survival: the conditional response of protective assets across economic states, loss severities, and investment horizons. The theory yields a portfolio protection account, a repair-horizon distinction, and a cost-aware allocation rule. A transparent, externally anchored laboratory separates public-market anchors from design assumptions and evaluates equities, Treasuries, gold, and cash under matched execution policies. With conservative return assumptions, conditional information adds about sixteen basis points of annual mean-variance value over stationary allocation and ten over a return-based covariance model. An equally informed statistical learner ties. State allocations, trading charges, tail losses, outcome dispersion, and failure scenarios explain the result. A separate joint-loss insurance experiment shows why valuable protection need not have positive expected profit. The contribution is an integrated financial measurement and implementation framework, illustrated by reproducible simulations; historical incremental forecasting value remains to be established. Key Takeaways \u2022 Inherited response, endogenous economic laws, and feasible trading capacity determine whether protection survives. A condition-and horizon-dependent hedge response translates those economic mechanisms into a portfolio protection account. \u2022 Matched simulations separate information from execution. Conservative return assumptions reveal smaller risk budgets, little demand for gold, meaningful conditional information value, and a tie with an equally informed statistical model. \u2022 Hedge-failure insurance can improve portfolio welfare while losing money on average. Positive expected trading profit requires a forecast advantage large enough to cover the quoted premium, financing, and implementation costs.<\/jats:p>","DOI":"10.2139\/ssrn.7609618","type":"posted-content","created":{"date-parts":[[2026,10,14]],"date-time":"2026-10-14T14:38:06Z","timestamp":1791988686000},"source":"Crossref","is-referenced-by-count":0,"title":["Hedge Survival: Managing the Failure and Recovery of Diversification"],"prefix":"10.2139","author":[{"ORCID":"https:\/\/orcid.org\/0009-0009-7676-5409","authenticated-orcid":true,"given":"Johannes Maria","family":"Posselt","sequence":"first","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"78","container-title":[],"original-title":[],"deposited":{"date-parts":[[2026,10,14]],"date-time":"2026-10-14T14:38:07Z","timestamp":1791988687000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.ssrn.com\/abstract=7609618"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2026]]},"references-count":0,"URL":"https:\/\/doi.org\/10.2139\/ssrn.7609618","relation":{},"subject":[],"published":{"date-parts":[[2026]]},"subtype":"preprint"}}