Let me give you an example. If you run an exporting business that garners you an annual profit of, say, US$1 million. Year after year you have an extra million dollars to put away in the bank. Over time, you realize, however, the US dollar has been steadily losing its value - the green back has lost half its value against the euro, for example, in just the past few years. Therefore to guard against future losses, you decide to buy some euros and perhaps also British pounds sterling. By keeping, say, three currencies instead of one, you will have diversified your savings and hedged yourself against possible future depreciation of one particular currency against another.
Or you can ask a hedge fund to handle this business for you. A hedge fund is run by professionals who do all kinds of hedging businesses apart from currency dealings.
Keep reading, Zhou, and you'll become fluent in financial terms. Hedge funds, mutual funds, stocks and bonds and what have you, they are the higher forms of capitalism. I encourage you and all people to learn a bit about them - this is the calling of the times - if just to be able to run your own finances a bit better.
Even if you regard capitalism as one of your enemies, I encourage you to do it - capitalism is not going away, you know.
And as they say, if you can't beat them, join them.
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