Making money during cycle downturns

[Nowler]

Hey folks,

This is for you more experienced investors.
I am looking into how one might make money from the downturn from the high of economic cycles.
I remember reading something before about a guy who invested into an inverse fund?...

I currently invest with Vanguard (a blend of equities and bonds index's) and don't see anything that matches what I am looking for.
I could send them a message asking for such funds, but I'd like to be sure I cross my t's and dot my i's before wasting their time with silly nonsensical questions.

As it stands, I know more about stocks than I do about bonds (i'll get to learning more now), and with my current investments, essentially, they go up when the markets expand, and go down when the markets contract.
Due to the stage of the cycle I perceive we are in, I would like to make money from the inevitable contraction (when ever that is).

Can anyone help me become a bit clearer on this. Or point me in the right direction?

Thanks!

 

[tomorton]

The simplest way to benefit from falling prices is to spreadbet them. SB is not economical for very long-term positions.

 

[Nowler]

The simplest way to benefit from falling prices is to spreadbet them. SB is not economical for very long-term positions.

Cheers buddy!
I appreciate you taking the time to help.

Why do you believe that it's not very economical for very long term?

 

[tomorton]

Costs of opening plus financing holding the position. But for short or medium term (say out to a month or two or three at most) its bearable and the simplicity is a nice bonus and there are no tax records to keep or report. You can also open a tiny account with tiny stakes per trade plus (thanks to ESMA and the FCA) no risk now of losing more than your deposit no matter what you do.

 

[Nowler]

Hmm..
I've never held a position over such a long period.
So i've no experience of how much it costs.

The tax-free aspect is certainly nice though.
I think everyone could agree on that

Except the taxman of course...

 

[Solas0077]

What about OTM options? There is cost but risk is fixed.

 

[Nowler]

What about OTM options? There is cost but risk is fixed.

I know next to nothing about Options.
I was under the impression that OTM options were an inferior method.
Somewhat of a long shot, or a hope and pray type of thing

I do intend to look more into options, but not yet

 

[Silverston]

There are lots of inverse ETFs and some offer multiples x2 and x3 leverage - but they only perform in periods of high volatility - read downturns - and in the meantime can lose value steadily.

Since you are familiar with stocks you may find it interesting to study shorting techniques, the book Short Selling with the O'Neil Disciples is good but not for the faint hearted.

 

[Pat494]

They say the " Big Boys " watch the inverted yield curve as one sure way to catching the next recession.
It has predicted the last 3 right enough but can it do it for the 4th ? - Maybe.
FYI it is currently going into reversion !!!!!!!!!! So get ready

 

[AdamCantor]

I know next to nothing about Options.
I was under the impression that OTM options were an inferior method.
Somewhat of a long shot, or a hope and pray type of thing

I do intend to look more into options, but not yet

i agree. education is key! without which one can not hope to be profitable consistently and consistently long term.
i always steered clear of binary options- do we have anyone here experienced in the field and what advice would one give?

 

[tomorton]

i agree. education is key! without which one can not hope to be profitable consistently and consistently long term.
i always steered clear of binary options- do we have anyone here experienced in the field and what advice would one give?

Never used them myself but it seems the game's over anyway if you're in the UK - binary options have been banned by the FCA.

 

[Nowler]

There are lots of inverse ETFs and some offer multiples x2 and x3 leverage - but they only perform in periods of high volatility - read downturns - and in the meantime can lose value steadily.

Since you are familiar with stocks you may find it interesting to study shorting techniques, the book Short Selling with the O'Neil Disciples is good but not for the faint hearted.

I'll take a look at the book, cheers.

 

[AndreaParr]

A financial advisor can help you.

 

[NVP]

Focus on low-cost Vanguard ETFs® and mutual funds, and enjoy the freedom to choose other types of investments. Enjoy commission-free trading when you buy or sell ETFs or Vanguard mutual funds online. You also have access to more than 160 no-transaction-fee mutual funds from Vanguard and more than 3,000 funds from other companies.

jees what a plug ......hahahaha

 

[Nowler]

jees what a plug ......hahahaha

Was thinking the same myself.