ETFs (Exchange Traded Funds) can do amazing things.  If you have the stomach for risk, the following new entries to world of ETFs can help you stay in the black when the market turns red.

1. Short ETFs
ETFs that “short” the market are, in the simplest terms, betting that the market will go down.   For example, if you believe the Dow Jones Industrial Average will decline 3% in one day, you can purchase ProShare’s Short Dow 30 ETF – DOG.  If the Dow does go down 3%, this fund will increase 3%.  Of course, if you are incorrect and the Dow increases 5%, this fund will lose 5%.   It’s not limited to the Dow, a few more examples are PSQ which shorts the NASDAQ, and SH which shorts the S&P 500.

2. Ultra Short ETFs
Regular shorting not exciting enough for you?  If you’re ready to roll the dice for even greater potential returns, so-called “UltraShort” shares return two-times the market.   If you short the Russell 2000 Small Cap Index using ProShare’s TWM and it decreases by 8%, TWM will return an impressive 16%.  But again, if the Russell 2000 increases even a small 2%, this fund will lose 4%.  Ultra Short ETFs can be found to short the NASDAQ, the S&P 500, Mid Caps and more.

3. 3X Bear ETFs
If you’ve full on lost your mind for shorting and are absolutely convinced the market will tumble and fall down, down, down, there are also ETFs which short the market and return THREE TIMES the fall.  Direxion’s Large Cap Bear 3x Shares (BGZ) shorts the Russell 1000 three times its inverse.  Of course, this also means if the market rebounds you are set to lose three times as much as it increases.  Vegas, anyone?

4. Long ETF
It wouldn’t be fair to ignore the flip side.  You think the market has been beaten up as much as it can, the floor has been set and we’re ready to rebound.  So now you’re ready to “long” the market (the opposite of short, of course).  So you bet it will go up in price, instead of down.  “Sounds like a regular investment” you say, and of course, you’re right.  But in the vein of the multiplier ETFs mentioned above, you can also bet on the market going up and get two-times or three-times returns.  ProShares Ultra QQQ (QLD) aims to return twice the return of the NASDAQ 100 and Direxion’s Large Cap Bull 3X Shares (BGU) seeks daily investment results of 300% of the price performance of the Russell 1000 Index.

Keep in mind that these investments are extremely RISKY.  But if you play your cards right, the market can work in your favor, if it goes up or down.

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