Short ETF Strategy & Viability Thoughts..?

[The_Wizard_Of_Oz]

I am interested in exposure to ETFs short on various market indexes, from quick research I understand (at a high level) the issues associated with leveraged ETFs (i.e. - decay). However, my question is, are the issues mitigated through use of an un-leveraged ETF(1x)?

Additionally, are there any short ETFs that would be better suited for medium to longer term holding?

I have some funds I don't need access to for a few years and am thinking rather than gain nothing with it sitting the bank to hold some short ETFs and hold out until the market starts weakening. Odds are that the market in that timeframe will have started to loose some fizzle and when the market falls its going to fall past current levels.

Ideally I would like to diversify across a few ETFs and have also thought about investing 50%of my funds initially and adding a certain amount every month to dollar cost average down in case the market rises sooner rather than later.

Any thoughts and ideas would be gladly welcomed.

 

[The_Wizard_Of_Oz]

OK I think I just answered my own question.

Yes, they do.

Does anyone have any recommendation of a simple strategy to short the market medium-long term?

http://www.elitetrader.com/et/index...-etfs-decay-the-same-as-the-2x-and-3x.183149/

 

[Sig]

I am interested in exposure to ETFs short on various market indexes, from quick research I understand (at a high level) the issues associated with leveraged ETFs (i.e. - decay). However, my question is, are the issues mitigated through use of an un-leveraged ETF(1x)?

Additionally, are there any short ETFs that would be better suited for medium to longer term holding?

I have some funds I don't need access to for a few years and am thinking rather than gain nothing with it sitting the bank to hold some short ETFs and hold out until the market starts weakening. Odds are that the market in that timeframe will have started to loose some fizzle and when the market falls its going to fall past current levels.

Ideally I would like to diversify across a few ETFs and have also thought about investing 50%of my funds initially and adding a certain amount every month to dollar cost average down in case the market rises sooner rather than later.

Any thoughts and ideas would be gladly welcomed.

Best idea, just go with futures. Next best, if you're working with liquid indexes where borrow costs are minimal and you're not in an IRA, just short the long ETF.
Every short ETF rebalances daily. This is not decay, in fact they all meet the daily percent change target almost exactly. However it does lead to unexpected results, i.e. the index can go down over a year and your short ETF can also go down (or go up twice as much as the index went down). It's all path dependent and you're really making a volatility bet. The only solution to this is to rebalance your position in the short ETF every day. If that's too much, at the very least you need to rebalance it on days with big moves and once it's moved significantly from the last time you rebalanced.

 

[bellman]

It's as though some people think "decay" in this context means "a failure to accurately match daily return percentages."

Best idea, just go with futures. Next best, if you're working with liquid indexes where borrow costs are minimal and you're not in an IRA, just short the long ETF.
Every short ETF rebalances daily. This is not decay, in fact they all meet the daily percent change target almost exactly. However it does lead to unexpected results, i.e. the index can go down over a year and your short ETF can also go down (or go up twice as much as the index went down). It's all path dependent and you're really making a volatility bet. The only solution to this is to rebalance your position in the short ETF every day. If that's too much, at the very least you need to rebalance it on days with big moves and once it's moved significantly from the last time you rebalanced.