As we sit and watch the Dow Jones Industrial Average plunge below 10,000 (down to under 9,800 as I write this), I feel compelled to note that no one has to sit and watch their entire investment portfolio evaporate into the thin air Democrat mandated bad lending decisions have created.
I want to start off by saying, first and foremost, I am not any sort of financial advisor or investment guru. Everything I write is written as a layman. Don’t take my word for things, or anyone’s word for that matter, without doing your own personal research and evaluating your own personal situation.
An Exchange Traded Fund (ETF) is a bundle of investments built like a mutual fund but trading on the open market like a stock. Few people are aware that there is an entire class of ETF that moves inverse to the stock market. They are called Short ETFs. In simple terms, if the market moves down 1% these funds are designed to move up 1%. In practice, on severe down days like today, they move a little less than the market sector they are supposed to represent because they are sold at a premium.
Not recommending any particular fund family here (could I possibly post any more disclaimers?), but you can get a general sense of the type of Short ETFs out there by looking at the list of ProShares Short ETFs. You’ll see that contrarian funds exist for just about every major market index and sector.
Like any investment, there is inherent risk in these investment tools. One school of thinking on a day like today is that the market is making a bottom. Buying a Short ETF at the market bottom would be like buying a stock at it’s top: It would be all downhill for your portfolio from there.
Again, I’m not recommending that anyone put their money into Short ETFs or that anyone pull their money out of any investment. But I do strongly believe that everyone should be aware of all the investment options available to them and make their own decisions, and it seems that not many people in the financial press or on channels like CNBC and FOX Business are making investors aware that this option exists.
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