Goldman Sachs is advising credit investors to protect against losses amid expensive valuations and rising geopolitical turmoil. “The cost of hedging is the lowest it’s been in probably a very long time — use that to your advantage,” said Lotfi Karoui, the firm’s chief credit strategist. “Look at that left tail of the distribution — the known unknowns, the unknown unknowns, the things that can take you off guard,” he tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Robert Schiffman, in the latest Credit Edge podcast. Despite this, Goldman is positive on the corporate debt market outlook, given very strong demand for limited supply, and sees opportunities at the single name level. Karoui and Schiffman also discuss “absolutely remarkable” value in mortgage-backed securities, the default rate, private market relative value, downgrade risk from a forecast pick up in dealmaking and European bond opportunities.