With a continuation this week of market volatility, it is no wonder the ProShares Ultra Short exchange traded funds (ETFs) were top performers. Ultra Short ETFs give double the opposite of the market return and are seen as "bearish" ETFs.
ProShares UltraShort Dow 30 (DXD) was up 3.5% over the last five days, while the Diamonds Trust (DIA) was down 1.7%. ProShares UltraShort S&P 500 (SDS) rose 3.7% over the last five days, and the SPDR (SPY) was down 1.8%. Similarly, ProShares UltraShort QQQ (QID) gained 2.3% and the PowerShares QQQ (QQQQ) dropped 1%. ProShares offers the Short and Ultra Short ETFs in other sectors and styles.
Although the market has been choppy lately and some may wonder if we are entering a bear market, it is important to keep in mind there have been up days and down days. So if you are thinking of using one of these "bearish" ETFs, keep in mind those days when the market does rise, the losses on one of these "bearish" ETFs would be magnified. As with any investment you want to add to your portfolio, it is important to know what you are buying and create an exit strategy, so you can get out of a position before you ride it down.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.