You can always lay some puts on the stocks they are invested in. In the event of a downturn this will hedge any losses. That way you don’t have to sell the stocks and take a tax hit. Keep in mind these will also be a drag on that portfolio in the event they go higher but it does act as an insurance policy. There are also some bear market funds you can play that are attached to the Dow, S&P and Nasdaq. I have to admit the market is tricky right now. There is a lot of momentum to the upside and at the same time we are in a housing bust and a lot of concrete evidence the economy is slowing down. One main reason for this is that the Global market is strong and that is playing well with US Companies with strong international business. This is only way to look at it. Some people like to play Bonds as a hedge.