Using ETFs in a Tough, Sideways-to-Bear Market
by Max Isaacman
The past 10 to 12 years have been difficult for stock market investors, with high volatility making it risky to buy and hold stocks and exchange-traded funds (.
This has forced long-term investors to become traders and to use securities they never thought they would, such as inverse and enhanced ETFs. This volatile, sideways market could continue for several more years. Investors and traders have to use the volatility to make money, while attempting to limit losses.
In my book “Winning with ETF Strategies” (FT Press/Minyanville Media, 2012), I point out that you should determine at what point in a cycle the market is currently and where it might be heading. Markets move in cycles, which take years to complete. In my book there is research by Guggenheim Investments showing that over the past 113 years, there were more bear market years than bull market years. Bull markets lasted an average of 10 years, and bear markets lasted an average of 18 years. The bear years were more similar to sideways markets than big down markets.
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