NEW ETFs ALLOW AVERAGE INVESTOR TO SHORT MAJOR INDICES OR LEVERAGE MAJOR INDICES

A company called ProShares launched a class of Exchange-Traded Funds (ETFs) in June of last year that allow small and/or average investors to “short” major indices such as the NASDAQ 100, DJIA, S&P 500, as well as many other American market and investment style indices. Not only may an investor “short” these indices by obtaining investment results that are inverse to the indices, but ProShares have ETFs available that are “doubly inverse”, or obtain results that are 200% inverse to the indices.

For example, ProShares has three ETFs available to invest in the NASDAQ 100. PSQ is a short fund. Its results match 100% of the inverse of the NASDAQ 100. So, for example, if the index falls by .5% today, PSQ would rise by .5%. QID is a 200% inverse fund. So if the index falls by .5% today, QID would rise by 1%.

ProShares also have ETFs that move 200% leveraged to major indices. So if an investor is bullish on the S&P 500, she may purchase SSO, an ETF that obtains results equal to 200% of the index. So if the S&P 500 rises by .3% tomorrow, SSO will rise .6%.

Rydex is a fund family that offers similar types of inverse and leveraged mutual funds. In the past, the Author has held these mutual funds when the market was in negative territory.

Currently, market indicators are positive, but indicate that the markets are risky and perhaps overextended. So the Author is fully invested in equities, including foreign markets. But when the indicators turn negative, the Author will let the readers know and it may be time to consider some of the ProShare “short funds”.

TAKE THE MARKET DAY BY DAY IN THE DESERT OF THE REAL!

IMPORTANT DISCLAIMER: This blog is offered for informational purposes only. Sources of information provided are believed to be reliable, but are not guaranteed to be complete or without error. Opinions and suggestions are provided with the understanding that readers acting on information contained herein assume all risks involved. The author may or may not buy or sell securities discussed in this newsletter.