t's hedge talk time again, folks. If you don't know precisely what a hedge is, you're not alone. But it does sound like something to hide behind.

But before you consider hedging, it's important to wring the emotions from your decision and to think long and hard about whether you really want to bet against the inexorably rising Dow. Those who have stuck with it have been the winners.

That said, there are many things you can do to bet against the market - some conservative, some fairly extreme. Most of us are mutual fund investors. So perhaps the best place to start is with mutual funds that you can sell short . Risky business, this, especially given the nature of mutual funds - where you are never quite sure of what the fund's price is. As Tom Taggert, a spokesman for Schwab & Co. puts it, a mutual fund doesn't have an actual price like a share of stock. Schwab, like most big mutual fund houses, doesn't permit short-selling of funds.

Some fund sellers, including Jack White and, to a degree, giant Fidelity, do permit short-selling. If you are a Fidelity customer with a margin account, you can short certain Fidelity Select Portfolios, including Select American Gold, Automotive, Biotechnology, Energy, Environmental Services, Food and Agriculture, Health Care, Medical Delivery, Precious Metals and Minerals, Regional Banks, Telecommunications and Utilities Growth.

But these are funds which may or may not move in sync with the market. If the Dow drops, for example, the gold fund could very well rise. If you short the gold fund, you could be losing money even as the Dow slips. In general, shorting the selects isn't a very effective way to bet against the overall market.

Funds that zig when the market zags As it happens, I was attending a financial planning conference in New York the week of the stock market dipsy-doodle in the fall of 1997, and I asked a number of planners what they were doing to hedge against the stock market. Not surprisingly, most of them were sitting tight, content their client portfolios were well diversified across all the appropriate asset classes. "It's times like this that make financial planners look good," said Ross Levin, a planner in Minneapolis.

But Lou Stanasolovich, a planner in Pittsburgh who can always be counted on to know about quirky investments, had some suggestions:

This is also a good place to mention a trio of mutual funds that were introduced during the choppy market of 1994, when the Standard & Poor's Index of 500 stocks barely eked out a gain. Investors were looking for a way to bet against the market, just like they are now. So these funds have a track record, albeit short.

Perhaps you want to hedge for yourself, rather than paying a mutual fund manager to do it for you. One way to do that is with options. Options give you the right to buy or sell stock or financial indexes at a set price during a specified time period.

A call option gives you the right to buy; a put option gives you the right to sell. You pay a premium for the right to buy or sell the underlying instrument at some time in the future at a specific price, which is called the strike price. If you are wrong, all you lose is the price of the option. Note: When you fool around with options, you're not only making a bet on the direction of the stock or index, but also the on the timing of the move.

Let's look at how a put option on a stock might work. Suppose XYZ Co. is trading at $25 a share and you think the market will head south. You buy put options, or the right to sell 100 shares of XYZ at $22.50 a share. Perhaps you pay $2.50 a share or $250 for the option. If XYZ holds at $25 or heads up, you lose your $250. If it drops to $22.50, your option is now worth $5 a share (the $2.50 you paid plus the $2.50 difference between the stock price and the strike price of the option).

Of course, you could buy "puts" on XYZ Co. if you held the stock as a sort of insurance policy. That is called a "covered option," because you own the underlying security. "Covered options are a way to establish a position to protect your downside in case the market drops," says Schwab & Co.'s Taggart. Or you could buy puts on a broad index, like the S&P 500, which would be a way of betting against the entire market of big cap stocks.

Options trading has exploded over the past decade and there are hundreds of options available, says John W. Lauer, director of trading at Schwab, who faxed me a list of 155 of them recently. In addition to the obvious, they include things like the Amex Gold Bugs Index and the Amex Tobacco Index. "If you have a diversified portfolio, you might want to buy an option on an index that most closely represents your portfolio," Lauer says.

One way to bet against the market is with a relatively new type of investment nicknamed "spider." A spider is a trust that owns stock positions to match a market index, like the S&P 500 index. It is traded on the American Stock Exchange, which developed and sponsors the instrument.

Spiders that invest in S&P 500 stocks are listed on the Amex under SPDR (SPY). Those that invest in the mid-cap index are listed under S&P Midcap. They can be purchased - or shorted - from any broker. Early in 1998, the Amex introduced a third instrument, called a "diamond," which invests in the Dow Jones Average of 30 industrial stocks, according to Dan Noonan, an Amex spokesman. Shorting any of these instruments would be a broad hedge against the market.

Example: Say spiders are trading around 94. If you think the market is heading down, you might arrange to borrow 100 shares at 94 and sell them back when stocks crash. If the market dives and you can buy them at 85, you will profit. But if the market keeps heading up, you will lose. And continue to lose until you buy back the shares.

I asked Schwab's Lauer if he hedges. "The problem with hedging is that it's like buying insurance you may never need," he says "If I'm holding these assets for 20 years I have to believe they're going to be worth more when I'm ready to cash them in. Why should I waste my insurance money on them?" Lauer insures his house, to be sure. He lives in the San Francisco Bay. "I'm on a slippery hill," he says. But as for his portfolio, "I'm just going to let it ride."

Or you might try the simplest of hedges: cash. You won't lose anything. The worst thing that can happen to an investment in cash, or a money market fund, is that you'll lose the opportunity to get a stock market return on that money. But if you're nervous about the market's outlook, you might settle for that.