Benefits of Short ETFs

Short ETFs are one of the new inventions in the stock market.  They allow people to make money as the markets are falling down.  But most investors don’t use them in fact most everyone seems to have an argument why you shouldn’t use them.

There articles say silly things like if you buy them your account will be damaged in the long run.  While it is true that your account can be damaged if you buy and hold them, they aren’t meant to be held that long. 

No one that I know of is going to buy a short ETF and hold onto it for the long haul.  It just doesn’t work that way.  This is similar to the way you do not short the SPY for the long haul.  If you are going to play the downside it has to be a short term play only.

Here are a couple more reasons why they might be right for you.

1.       You can Profit as stocks fall

Short ETFs allow you to make a ton of profit in the stock market by allowing you to make money as the markets fall.  I’m sure most investors would have done well to hold them the last couple of years.  

2.       They Pay Dividends

When you short stocks you are the one who ends up paying the dividends.  When you buy an inverse ETF you will still profit when the index goes down and you will not have to pay the dividends.  In fact you actually profit from dividends.

3.       Leveraged ETFs

One great thing about short ETFs is the fact that there are ultra shorts and 3 x shorts to help you make a higher return on your investment by using leverage.  I know many investors don’t even like to look at the word leverage, but when you are trading the market it can be a very powerful tool to help you increase the size of your winners.

For more on short ETFs visit http://www.stocks-simplified.com/inverse_etfs.html