SPDN: An Inexpensive Way To Profit When The S&P 500 Falls

Summary
SPDN is not the largest or oldest way to short the S&P 500, but it’s a solid choice.
This ETF uses a variety of financial instruments to target a return opposite that of the S&P 500 Index.
SPDN’s 0.49% Expense Ratio is nearly half that of the larger, longer-tenured -1x Inverse S&P 500 ETF.
Details aside, the potential continuation of the equity bear market makes single-inverse ETFs an investment segment investor should be familiar with.
We rate SPDN a Strong Buy because we believe the risks of a continued bear market greatly outweigh the possibility of a quick return to a bull market.
Put a gear stick into R position, (Reverse).
Birdlkportfolio

By Rob Isbitts

Summary
The S&P 500 is in a bear market, and we don’t see a quick-fix. Many investors assume the only way to navigate a potentially long-term bear market is to hide in cash, day-trade or “just hang in there” while the bear takes their retirement nest egg.

The Direxion Daily S&P 500® Bear 1X ETF (NYSEARCA:SPDN) is one of a class of single-inverse ETFs that allow investors to profit from down moves in the stock market.

SPDN is an unleveraged, liquid, low-cost way to either try to hedge an equity portfolio, profit from a decline in the S&P 500, or both. We rate it a Strong Buy, given our concern about the intermediate-term outlook for the global equity market.

Strategy
SPDN keeps it simple. If the S&P 500 goes up by X%, it should go down by X%. The opposite is also expected.

Proprietary ETF Grades
Offense/Defense: Defense

Segment: Inverse Equity

Sub-Segment: Inverse S&P 500

Correlation (vs. S&P 500): Very High (inverse)

Expected Volatility (vs. S&P 500): Similar (but opposite)

Holding Analysis
SPDN does not rely on shorting individual stocks in the S&P 500. Instead, the managers typically use a combination of futures, swaps and other derivative instruments to create a portfolio that consistently aims to deliver the opposite of what the S&P 500 does.

Strengths
SPDN is a fairly “no-frills” way to do what many investors probably wished they could do during the first 9 months of 2022 and in past bear markets: find something that goes up when the “market” goes down. After all, bonds are not the answer they used to be, commodities like gold have, shall we say, lost their luster. And moving to cash creates the issue of making two correct timing decisions, when to get in and when to get out. SPDN and its single-inverse ETF brethren offer a liquid tool to use in a variety of ways, depending on what a particular investor wants to achieve.

Weaknesses
The weakness of any inverse ETF is that it does the opposite of what the market does, when the market goes up. So, even in bear markets when the broader market trend is down, sharp bear market rallies (or any rallies for that matter) in the S&P 500 will cause SPDN to drop as much as the market goes up.

Opportunities
While inverse ETFs have a reputation in some circles as nothing more than day-trading vehicles, our own experience with them is, pardon the pun, exactly the opposite! We encourage investors to try to better-understand single inverse ETFs like SPDN. While traders tend to gravitate to leveraged inverse ETFs (which actually are day-trading tools), we believe that in an extended bear market, SPDN and its ilk could be a game-saver for many portfolios.

Threats
SPDN and most other single inverse ETFs are vulnerable to a sustained rise in the price of the index it aims to deliver the inverse of. But that threat of loss in a rising market means that when an investor considers SPDN, they should also have a game plan for how and when they will deploy this unique portfolio weapon.

Proprietary Technical Ratings
Short-Term Rating (next 3 months): Strong Buy

Long-Term Rating (next 12 months): Buy

Conclusions
ETF Quality Opinion
SPDN does what it aims to do, and has done so for over 6 years now. For a while, it was largely-ignored, given the existence of a similar ETF that has been around much longer. But the more tenured SPDN has become, the more attractive it looks as an alternative.

ETF Investment Opinion

SPDN is rated Strong Buy because the S&P 500 continues to look as vulnerable to further decline. And, while the market bottomed in mid-June, rallied, then waffled since that time, our proprietary macro market indicators all point to much greater risk of a major decline from this level than a fast return to bull market glory. Thus, SPDN is at best a way to exploit and attack the bear, and at worst a hedge on an otherwise equity-laden portfolio.

Wearing Golf Clothes

Getting good golf clothing is an important part of playing the game. If you apparel does not fit well or does not properly protect you from the weather, it can create a distraction while playing. If your clothes are uncomfortable, it can also greatly affect your playing time. Listed below are some basic tips to help you find the right clothes for golfing.Dress CodesDifferent golfing clubs have a variety of dress codes. Some may be very loose with their rules, while other have strict requirements about the clothing you can and cannot wear. The majority of clubs require nice pants or waterproof trousers, and sleeved shirts. If the weather is hot, you may be permitted to wear nice shorts and a polo shirt. Avoid wearing T-shirts and other casual types of clothing because it is generally frowned on at most golfing ranges. If you want to be sure about the requirements, you can call the range beforehand.WeatherIf you are golfing at a kid’s range with your children, be sure to bring children’s waterproof trousers and shirts in case it rains. Similarly, adults should also protect themselves from natural elements while playing. During hot weather, you will probably be comfortable wearing a pair of nice shorts and a collared shirt made from ventilated material. Colder days will require more clothing, so consider wearing a pull-over or long sleeve shirt with pants. If you are still cold, put on a jacket as well.The sun can be very enjoyable while playing, but there can be nothing more annoying than sun in your eyes while you are trying to focus on a tee. The sun can cause instant blindness, causing you to miss the swing or your shot. To keep this from happening, consider wearing a hat or sunglasses, or sometimes both.FootwearShoes are an important aspect for any golfer. Whether you are an amateur or intermediate player, it is essential to wear the right set of shoes. It should be comfortable, good quality, and able to handle well on all types of surfaces.You can buy shoes at almost any store, but golfing shoes will need to be bought at a sports shop. Tennis shoes are suitable for most areas, but you can also get specialized golfing shoes that are made for walking on grass and muddy areas. If you are walking for a long time, the shoes need to be comfortable to prevent blisters.

Construction Management Jobs for Felons – How To Get a High Paying Construction Job

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