Best Bet In A Bad Market
The vast majority of investors take a hit in a downturn.
And it’s not just because they don’t get out at the top, a near impossible thing to do.
Instead, they don’t hedge during the euphoric times.
Most investors absolutely refuse to “short,” or bet against, stocks.
Shorting stocks is a simple process. You borrow them, sell them into the market, and then, ideally, buy them back and return them to who you borrowed them from.
It’s fully automated and it’s just as easy buying stocks.
Yet, most investors just won’t do it even when betting against stocks offers far greater rewards than buying them.
It’s so bad that the first Google result on shorting stocks returned an article “Why You Should Never Short A Stock.”
We accept the bias.
So instead, we’ve found something that could absolutely soar during the next market downturn without “shorting” any stocks.
Betting Against Bullshit
One of the greatest success stories to emerge from the post-pandemic bubble was that of Cathie Wood.
She is the CEO of ARK Invest, an investment management firm that focuses on investing in innovation.
The investing premise is simple.
Innovation is the future. Technology will take over the world. Buy the most innovative tech stocks and wait.
Again, it’s simple, but it’s not an investment strategy.
If buying it was that easy, no one would have ever heard of value-focused Warren Buffett.
Wood’s main investment vehicle is the ARK Innovation ETF (ARKK) which manages more than $7 billion in assets.
The ETF’s top holdings are all the hottest names. The top four holdings at last report were Zoom (ZM), Exact Sciences (EXAS), Tesla (TSLA), and Roku (ROKU).
These were all pandemic darlings. Regardless how bright their futures may be, they were all richly valued. And they got crushed when the market turned down.
And if that’s where you see the market headed again, there’s an easy way to bet against these stocks without having to “short” any of them.
You can do it with the AXS Short Innovation Daily ETF (SARK).
It’s an ETF that reverses that does all the betting against the most innovative companies for you.
There could be ideal market conditions for this ETF coming up too.
A Return To Sanity
The great correction that started in 2022 had been exceptionally rough on the highest flying stocks.
Many of them were so richly valued that they could and did fall 70% or 80% or more.
A fundamental revaluation happened and it may not be over yet.
There’s nothing wrong with betting on innovation.
After all, the most innovative companies will be sitting pretty in a few years.
However, innovation is not an investment strategy.
When conditions are right, it pays off big.
When conditions aren’t perfect, the hyper-growth stocks carry a lot of risk and not much reward.
When stocks and markets get too frothy, AXS Short Innovation Daily ETF (SARK) will provide a great layer of protection and possible profits during a downturn.