Trading volume has been exploding with short and ultra-short exchange traded funds (ETFs). With the state of the market, it’s no surprise: many investors are investing short to ensure their long-term survival while they wait for the rocking ship that is the market to right itself once again.
While going short is risky, doing it with ETFs is safer and easier than doing it with individual stocks.
Richard Shinnick for Seeking Alpha recommends an ultra short basket of ETF focused on precious metals and international bonds. Take the UltraShort QQQ ProShares (QID) which takes a double-short position in the NASDAQ 100 index. Brett Steenbarger for Seeking Alpha calls it a sentiment gauge. Traders seem to become bearish just as markets are making an intermediate-term low.
Short positions in a portfolio are not meant for the long-term and it is important to pay attention when you invest in one of the short or ultra-short ETFs.
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.