| A basic investing guide might focus on how to invest | | | | with a short position, betting that prices will fall. When |
| in the stock market. This brief investing guide is | | | | you own shares of an exchange traded fund you |
| about investing money to profit when the stock | | | | own a small part of the portfolio. Hence, by owning |
| market is falling... in a bear market. Now, even a new | | | | shares in a bear market ETF that shorts the stock |
| investor can do it. | | | | market... you have a short position. You can buy or |
| Twice between the start of year 2000 and 2009, a | | | | sell shares in a matter of seconds anytime the stock |
| bear market clawed investors severely. Losses were | | | | market is open. |
| in the trillions. Both times some contrarian investors | | | | Here's an example of how to invest as a stock |
| knew how to invest and got rich. They were SHORT | | | | market BEAR (one who bets that prices will fall). As |
| the stock market - had a short position. Simply put, | | | | a new investor you buy 100 shares in SDS, a bear |
| they bet that the stock market would fall. | | | | market fund that shorts the S&P 500 Index |
| If you are a new investor this probably sounds | | | | with 2 to 1 leverage. Let's say you pay $40 a share |
| absurd or illegal to you. Not so. Shorting or "selling | | | | for a total investment of $4000. You could buy 10 |
| short" or "short selling" has been part of the free | | | | shares or thousands and still only pay $10 commission |
| market mechanism for a long time. The late Joe | | | | with a discount broker. |
| Kennedy, father of John F. Kennedy, knew all about | | | | A month later the stock market as measured by the |
| it... and was an active participant in the markets in the | | | | S&P 500 Index (which represents the market) is |
| era of the Great Depression. And it appears that he | | | | down 10%. Your SDS stock with 2 to 1 leverage |
| made money. | | | | should be up about 20% or $8 to about $48. You |
| Traditionally you took a short position in the stock | | | | can buy more, hold, or sell for a profit of about 20%. |
| market by first selling a stock that your broker | | | | The process is that simple. |
| borrowed for you. Then you waited for the stock to | | | | What's not simple is timing your purchase, because |
| fall in price so you could later buy it cheaper and | | | | obviously if the stock market goes up after you buy |
| return the borrowed shares. The difference | | | | SDS, the stock will go down. The new investor |
| represents your profit. Or, you bought PUT stock | | | | should also be aware of the risks involved with |
| options, which are a bet that a stock(s) will fall in | | | | financial leverage (like 2 to 1) and betting against the |
| price. | | | | stock market. It is up more often than it is down. |
| In this investing guide we will keep it simple and not | | | | Except, that is, in a bear market. |
| get into the nuts and bolts of the two above | | | | There are numerous bear market ETFs. Get familiar |
| methods of taking a short position in the stock | | | | with them and how they trade. You can get your |
| market. Instead we will show you how to invest | | | | feet wet for a few hundred dollars. One final tip from |
| against the market the new and easy way by simply | | | | this investing guide for bears: don't buy these stocks |
| buying a stock called an inverse or BEAR MARKET | | | | as a long term buy and hold. If you take a short |
| exchange traded fund (ETF). These stocks trade on | | | | position and it goes against you, get out at a small |
| major exchanges like any other stock commonly | | | | loss and live to play another day. A bull market like |
| traded. | | | | the one that started in March of 2009 can be brutal |
| A bear market ETF maintains a portfolio of securities | | | | if you're a bear. |