That doesn't work if someone does not have enough cash to buy in the 'buy' season...and in particular, those in withdrawal mode without the 'cash dam'. Or one has to sell something out of another segment of their asset allocation to get the cash.The intelligent response is to then buy during buy season. No need to hedge something that is not seen as a problem.
To respond to HP, I didn't 'freak out' in 2008/2009 due to a strong and well funded asset base to backstop relative 'tranquility'. Can't say I was a happy camper but like LTR, I was investing and tax loss selling during that period. I just happened to have a pretty good cash allocation at the time.
My 'black swan' hedging strategy is somewhat like LTR's strategy. I hold enough cash and cash equivalents that together with my small DB pension and dividend income, it will see me through a number of years of financial crisis. True, some dividends will get cut but I've taken a pretty significant discount to current investment income streams as part of my consideration.
Added: And I can cut back annual spending significantly if some really bad stuff happens.