Being a buy side investor in a sellers market is a difficult proposition. Investing in any stock or market sector is a daunting task without some type of downside protection. Or, if your just looking to profit from further market decline and you do not have the margin to sell short, here are a few downside reccomendations.
DOG- The DOG can be purchased to replicate the inverse of the Dow Jones Industrial Average. Take the monthly/yearly chart of the DJIA and flip it over and you have the chart of the DOG, a very profitable proposition over the past several months. The Dog can be used as a great downside hedge/protection in junction with a small alloaction of individual stocks.
QID- Like the DOG the QID can be purchased to replicate the inverse of the NASDAQ Composite and offers all the same downside protection as the DOG. Have a portfolio of Technology stocks you would like insurance on, the QID is a profitable way to hedge against losses
VIX- The Chicago Board Options Exchange Volatility Index (VIX) is a gauge that measures the anxiety of the market. When anxiety in the market is high, the VIX is high, and when the market is complacent, the VIX is low. The VIX can be bought and sold just like any other equity but reccomended to do so only for the active trader. Buyers of the VIX are afforded protection against large market downturns because the VIX rises as stocks fall.
There are also a surplus of reverse ETF's that are available for purchase that allow you to single out a specific area of the market. Reverse ETF's exist for the Banking/Finance Sector, Technology, Energy, and so on and are a great way to hedge a portfolio to the downside. Google Search: Reverse ETF's for suggestions.
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