Places to Hide in a Stock Market Crash: Inverse ETFs
Can’t just hang around waiting for the storm to pass? I totally understand your impatience. I can’t sit by idly and do nothing in the face of adversity either. It’s not in my nature. I prefer to fight back, throw punches … even tilt at windmills if I have to.
Fortunately, investing during a market crash is no quixotic undertaking, and that’s largely due to the many inverse ETFs available to investors today.
These are funds designed to move in the opposite direction of their respective indices. For example, you can short the S&P 500 index via the ProShares Short S&P500 (ETF) (NYSEARCA:SH). That fund hasn’t done very well in this bull market; however, in 2008 SH was up nearly 40%. That’s the power of a well-played inverse ETF during tough times.
More aggressive short plays using inverse ETFs include those that employ leverage, such as the ProShares UltraShort S&P500 (ETF) (NYSEARCA:SDS), which is designed to move twice the inverse of the S&P 500.