Counter-cyclical investment options?
Discussion
Hi all, through my job I'm very exposed to the health of the stock market, particularly the London stock market.
I would like to invest some money (say between £4k and £20k) in an investment that will increase significantly in value if the stock market takes a tumble, i.e. drops by more than 5% in a couple of months.
I know gold is typically a hedge against a loss of value, but what would be a good investment if I actually wanted to profit from a falling stock market?
I would like to invest some money (say between £4k and £20k) in an investment that will increase significantly in value if the stock market takes a tumble, i.e. drops by more than 5% in a couple of months.
I know gold is typically a hedge against a loss of value, but what would be a good investment if I actually wanted to profit from a falling stock market?
Very definitely not for widows and orphans but the soc gen securitised leveraged puts would fit the bill. E.g.
https://sglistedproducts.co.uk/productdetailspage/...
You can chose the strike and hence the leverage but if you are betting on a falling market they'll do the trick. Indeed I think there is one on the euro stoxx banks which if you are exposed to financial services might be a more direct hedge. They are listed so just like buying an eft - you may have to complete a "sophisticated client" self-certification if buying online via HL or similar.
You should note that even a relatively small rise in the market will wipe you out!!
https://sglistedproducts.co.uk/productdetailspage/...
You can chose the strike and hence the leverage but if you are betting on a falling market they'll do the trick. Indeed I think there is one on the euro stoxx banks which if you are exposed to financial services might be a more direct hedge. They are listed so just like buying an eft - you may have to complete a "sophisticated client" self-certification if buying online via HL or similar.
You should note that even a relatively small rise in the market will wipe you out!!
2x and 3x short ETFs there are a variety to choose from.
But you better know what you are doing.......
These are fundamentally day trade as they "start off each day" They are only 2x and 3x each day, then they reset.
That doesn;t mean you can't buy at close and leave a sell for the next morning, I actually found that ok as you are selling at time when others are looking for protection.
Basically if get you everything right, perfect timing, good execution you can get 1.8 on a 2X.
I used 2x longs in 09 and did quite well.
But a couple of times my limit sells.....didn't....and that meant dead money.
Start again with fresh money and try not to be too greedy with the next limit sell.
Leave a break even limit sell on the dead one so you have another lump to play with.once it executes.
you need to take advantage of happy hour and understand how orders are filled.
My limit sells were set at around 2.5% during a hot market. (profit)
It is easier to make on the longs than the shorts, it just is.
I shorted China twice using a 3x, I got it right both times, but the return was not worth it.
It seems more difficult to profit from shorts.
If you look at the volumes you can see your opposition is professional........., fund managers protecting positions etc..
You will get more volatility on a finance index than the FTSE 100
Best of luck.
But you better know what you are doing.......
These are fundamentally day trade as they "start off each day" They are only 2x and 3x each day, then they reset.
That doesn;t mean you can't buy at close and leave a sell for the next morning, I actually found that ok as you are selling at time when others are looking for protection.
Basically if get you everything right, perfect timing, good execution you can get 1.8 on a 2X.
I used 2x longs in 09 and did quite well.
But a couple of times my limit sells.....didn't....and that meant dead money.
Start again with fresh money and try not to be too greedy with the next limit sell.
Leave a break even limit sell on the dead one so you have another lump to play with.once it executes.
you need to take advantage of happy hour and understand how orders are filled.
My limit sells were set at around 2.5% during a hot market. (profit)
It is easier to make on the longs than the shorts, it just is.
I shorted China twice using a 3x, I got it right both times, but the return was not worth it.
It seems more difficult to profit from shorts.
If you look at the volumes you can see your opposition is professional........., fund managers protecting positions etc..
You will get more volatility on a finance index than the FTSE 100
Best of luck.
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