Wednesday, June 27, 2007

Bear Market Trades

ProShares offers several Exchange Traded Funds that short sell their respective index by a 2:1 ratio.

QID - Proshares UltraShort QQQQ
SDS - Proshares UltraShort S&P 500
DOG - Proshares UltraShort DOW

For every 1% the QQQQ (Nasdaq 100 Trust) loses the QID should gain 2%. I use them as a simple and effective why to hedge my portfolio during extended down drafts and I plan on using them for the next bear market.

I like these funds because they allow me to hold on to the more aggressive positons in my portfolio. I can hedge with one simple buy order instead of selling multiple positions that have often taken quite a bit of time to accumulate. Remember, because of the 2:1 ratio a little goes a long way.

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