How can you use exchange traded funds(ETFs)? When you get ready for a market turnaround, here are some ways to prepare when there’s a rebound and you’re in cash.

1. Use them for diversification. You don’t have to choose one stock. Google (GOOG) or Yahoo (YHOO)? Instead of choosing one or the other, you can get exposure to both and spread the risk. Technology Select Sector SPDR (XLK) holds both Google 4.6% and Yahoo 1.2%.

2. International exposure made easy. If overseas exposure is what you are after, then you can go two ways; A broad-based international funds such as Vanguard All-World ETF (VEU) gives exposure to various countries such as Canada, United Kingdom and Australia in one fund. Or a single-country fund can give the right amount of exposure for a specific need within a portfolio. iShares MSCI Austria (EWO) gives exposure to Austria and also gives a portfolio the exposure to Eastern Europe.

3. Target Specific Sectors. ETFs are great for well-rounded exposure to a certain sector. Bonds ETFs, for example, can also be used to get diversified access to an area that was once cost-prohibitive for most investors. Utilities Select Sector SPDR (XLU), iShares Dow Jones Transportation Average (IYT)iShares Dow Jones U.S. Telecom (IYZ), CurrencyShares Japanese Yen (FXY), and iShares S&P GSCI Commodity Indexed Trust (GSG) are all examples of ETFs that give investors simple, targeted access to a specific sector.

4. Easy Flexibility. ETFs are liquid and trade throughout the day like a single stock. You can get in and out of the fund on your terms, and get pricing at all times of the trading day. It is a good idea to have a strategy when investing with anything, and for ETFs, we suggest watching the 200 day-moving-average. If a fund dips below this, or goes 8% off its high, it’s time to exit. ETFs make this easy because of their flexibility.

5. Shorting and leverage ETFs have made some of the most difficult tasks linked to investing easier. Shorting the market and leveraging your exposure is now possible through one fund. It is not foolproof, however, and the risks of shorting the market still apply. Investors need to understand them and be sure they can handle it.

6. What you see is what you invest in. You know what you’re getting when you invest in an ETF. They follow an index, so there’s no guessing. Since there is not a manager, the fees are much lower. You can also go to any provider’s site to see current holdings. Visit our provider page for easy access to the websites for all ETF providers.

7. Do your research. Although ETFs are transparent, the fact remains that a bit of your own research can go a long way. The great news here is that doing this research is easy, since everything you need to know is out in the open and readily accessible. It is recommended to research the holdings of what the ETF actually holds, as well as what the allocation is to that specific holding. Our ETF Analyzer makes this a cinch and you can do it all at one stop.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.