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Sunday, September 25, 2011

Hedging Against Plunging Commodity

The market has been in turmoil as US and European countries are facing rising debt.  Last week major indices tanked as Fed Chief Bernanke's new move failed to comfort the anxious investors.  While investors are fleeing most equities, some investors are actually making money in the down market by spreading their nested eggs into a special family of ETFs - the Ultra Short ETFs.  These special ETFs bet against the market by shorting so the worse the market the better these ETFs perform.  For instance last week ProShares UltraShort Silver (ZSL), which bet against the price of silver, surged 28.76% on Friday and almost 54% in two days as price of silver plunged.  By allocating part of the portfolio with such ETF could not only reduce the loss but could also beat the broad market.  So next time when the mood of the market is going negative again, start looking at these ETFs for hedging.


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