BlogEric SnaellFebruary

Investing in a bear market


Most people watch the news everyday and get a daily dose of worldwide misery. Perhaps this makes everyone feel well informed and smart. Now, let's say that you are an avid follower of the news and you are convinced that a certain country's economy is going down the drain. Why not put some money where your thought is? Ok. well, how are you going to go about doing that?

Generally, the population that own stocks, only own domestic stocks. When the market declines they

A) do nothing

B) sell their holding

C) buy gold/silver.

But you can take a more offensive approach. Someone might say that selling short is the way to go. I would agree if the question is about a single equity position. But setting up the security borrowing agreement and paying the fees for it, is perhaps not that lucrative. The easier way is to invest in an ETF (Exchange Traded Fund) that fits your view of the market direction. It doesn't of course have to be a market specific ETF (The Global X Social Media Index ETF for instance invest solely in social media companies, such as Facebook).

I think the most interesting ETF's are the ones that allow you to invest in a bear market. Example: This week there were a lot of talk about the weakening emerging market currencies. If you believe the market will continue in this direction, you could buy the Proshares Ultrashort MSCI emerging markets ETF. The name 'ultrashort' indicates that the value of the ETF increases when the value of the market index decreases.

Ultrashort ETF's are not only perfect for pessimistic people, but for the average joe as well. ETF purchases are usually priced similarly to equity purchases. In other words, it's inexpensive and easy.

We don't have to sit on the couch and watch the markets slide down along with the value of our investments. So until next week, get off the couch and I'll see you at work.

Why is Explosive Mode publishing financial articles?

Athletes are usually paid in lump sums, whether it's prize money, sponsorships or for commercial appearances. Professional athletes tend to earn considerable amounts of money during their active careers and have to learn how to manage it in order to survive after their sports careers are over. Explosive Mode featured athlete Eric Snaell (the Fit Businessman) writes about financial topics that cater to these athletes. His experience in banking, equity investments and entreneurship provides valuable information that is not taught at schools. You can find out more about these investment strategies in his upcoming book Independent Mode (Resign Anytime).

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