Stock prices are too high, earnings are falling, and everywhere in the world one looks, one sees signs of potential—if not necessarily imminent—crises. Any crisis could tip stocks into a steep enough dive to spark real fear, and in climate such as this, i.e., when stock prices are unsupported by fundamentals, any spark could flame up and burn the market to the ground. I’m sure there’s no need to describe what that looks like in stock market terms, as it has happened twice in just the past 15 years, first in 2001 and again in 2008.
I made my case for the coming bear market here in on June 3 with the S&P 500 at 2,099, and here on August 8 with the S&P 500 at 2,182. Of course, for some sectors of the market, energy, for example, the bear is already here. In China, once vibrant markets are drifting into a rut, and as for hedge-funds, well, they’ve gone seriously wonky. So far, in 2016, hedge funds are losing money on average, despite the market’s hitting almost daily record highs, and what’s even more unusual is that hedge funds now have a net outflow of money. That tells you that the richest of the rich are already bailing out on a market they know they have ridden for everything it is worth. The only question is, this time, are the rest of us going to let them get away with keeping their money, while the rest of us get stomped?
Fortunately, the free market remains, despite everything, pretty darn free, and by short selling, you can turn the tables around slap-backwards and make a profit while everything loses value. Here are a few ETFs I personally intend to short sell over the coming days, weeks, and months. Remember to consider these ideas to be just that, ideas, and do your own research before investing. And as a special note for short-selling, losses are unlimited when you short sell, so remember to determine your pain threshold before you start, and be resolute about buying back if things go against you rather than letting losses run.