Post by stingray on Aug 21, 2015 20:55:29 GMT -5
You’ve probably heard of those people on wall street that always make money no matter what the economy does! When the economy declines and stocks loose value 95% of investors loose money. A small fraction make money though. They do what is called shorting a stock. This is were investor A borrows shares, let’s say 100 shares, from investor B. Investor A sells these shares for market value, $50.00 a share. The stock falls in value to $30.00 a share. Investor A then buys 100 shares at $30.00 and gives the 100 shares back to investor B. Investor A then pockets the difference of $20 a share which equals $2,000.00.
Short selling stocks is not for the weak at heart, because if the stock increases in value you can loose money quickly. It takes experience and specialized software to sort through all the stocks and analyze the technical data to find potential stocks that may be over valued and could loose its share price. It also takes precise timing. The long and the short of it is that most people with full time jobs and families don’t have the time nor the resources to participate in this side of the stock market.
One option may be an inverse equity fund. The purpose of these funds is to mimic a stock market indice so that when the value of that indice, like the S&P 500 goes down, the price of the inverse equity fund goes up. Some of the funds that I’ve been watching to see how they perform when the markets decline like Friday are: SRS, SDP, SPXS, QID, DRV, TECS, SCC, FAZ, SQQQ, SH, SDS, SPXU, SPXS.
For the long term these funds will loose money because the market over a 10 or 20 year period goes up. But if you feel that the market may be entering into a correction period, you may want to talk with your financial advisor about moving 10% - 30% of your investments into an inverse equity fund for a short period of time.
Given the fact that China is in a free fall, currencies are weakening around the world and 32 countries this year have had stock market crashes, now may be the time to rethink your investment strategies. The challenge for American’s right now is that we are in unchartered territory. The stock market has had heavy loses this week. If this continues, then the consequences of all this money printing the fed’s have done the last 6 years will be in full effect. We’ve never been in a position to monitor how the markets react to fiat money during a correction. Things may be about to get real dicey!
Short selling stocks is not for the weak at heart, because if the stock increases in value you can loose money quickly. It takes experience and specialized software to sort through all the stocks and analyze the technical data to find potential stocks that may be over valued and could loose its share price. It also takes precise timing. The long and the short of it is that most people with full time jobs and families don’t have the time nor the resources to participate in this side of the stock market.
One option may be an inverse equity fund. The purpose of these funds is to mimic a stock market indice so that when the value of that indice, like the S&P 500 goes down, the price of the inverse equity fund goes up. Some of the funds that I’ve been watching to see how they perform when the markets decline like Friday are: SRS, SDP, SPXS, QID, DRV, TECS, SCC, FAZ, SQQQ, SH, SDS, SPXU, SPXS.
For the long term these funds will loose money because the market over a 10 or 20 year period goes up. But if you feel that the market may be entering into a correction period, you may want to talk with your financial advisor about moving 10% - 30% of your investments into an inverse equity fund for a short period of time.
Given the fact that China is in a free fall, currencies are weakening around the world and 32 countries this year have had stock market crashes, now may be the time to rethink your investment strategies. The challenge for American’s right now is that we are in unchartered territory. The stock market has had heavy loses this week. If this continues, then the consequences of all this money printing the fed’s have done the last 6 years will be in full effect. We’ve never been in a position to monitor how the markets react to fiat money during a correction. Things may be about to get real dicey!