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Best way to make money as the market goes down? (coming recession?)
- Thread starter freedomseeker
- Start date
If you know what the market will do, what’s the problem? If it goes down, short it with as much leverage as you can, use options, futures, whatever instrument you have available and you will make a ton of money 
short etf are not exactly what you want if you just hold them for a year or so.
Think different: If everybody thinks/expects/talks about a recession, the Mr. Market does that, too. Meaning markets might have already priced in a lot of this soon-to-be-expected recession.
It's probably not worth anymore to bet on a significant crash.
There were some talks which i mentioned earlier that you don't own stocks most often when using a broker/bank but just have a claim like having money in your bank account.
So should the recession really be so bad it might happen brokers may also go broke because of lending of stocks etc .
A market guru claimed that a single stock can be lended up to 8 times.Which means its 8 times in the account book of somebody but there is only one existing stock
If governments really want people to go broke i doubt they will protect retail stock holders.
So you would also need a good setup to not be in the mass which go broke
So should the recession really be so bad it might happen brokers may also go broke because of lending of stocks etc .
A market guru claimed that a single stock can be lended up to 8 times.Which means its 8 times in the account book of somebody but there is only one existing stock
If governments really want people to go broke i doubt they will protect retail stock holders.
So you would also need a good setup to not be in the mass which go broke
In other words: how can one think to be smarter than all the other participants in the market?
As somebody who works in the Hedge Fund Industry i can say, that ETFs are great but leveraged ETFs are crap.
Why?
They are two kinds of Leverage, despite both are called Leverage. Sounds strange but that's a fact.
ETFs and Factor-Certificates/Warrants are static leveraged. They have a static Leverage lets say 10 (mostly less) which always stays the same. So lets do a little calculation here:
A Etf starts with 100 points and it rises by 1%, so the new point-value is 110.
A day later the Etf falls by 1% so 110 points become .... 99, yeah thats right! 99 is not 100 you have lost 1 point. Sure this effect (it's called volatility drag) is not that strong if your ETF is leveraged by 3 or 2 but you will still lose money for nothing and they sell this crap to retail investors!
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Futures, Options, CFDs and Knock-Out-Certificates/Warrants on the other hand are dynamical leveraged. Their leverage changes all the time, as they value changes. When their value increases the leverage-value falls, when they value decreases the leverage-value rises. So you don't will have any volatility drag. Sure you have some costs as these are leveraged products you have to pay interest but its less than a volatility drag can destruct in capital.
In the hedge fund world, we always use dynamical leveraged derivatives like Futures, Options, CFDs and Knock-Out-Certificates/Warrants, static leveraged products are mostly banned.
Why not post the explanation -> What Is an Echo Bubble
The term "dead cat bounce" is more popular and better understood.
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If you know what the market will do, what’s the problem? If it goes down, short it with as much leverage as you can, use options, futures, whatever instrument you have available and you will make a ton of money
There's a piece of little known information about market corrections, no one knows when they will happen simply because there are too many dynamics in play, however those with experience can provide a general guide for when to expect it, and therein is the problem, with leverage you cannot use a 'guide' you need exact numbers which not even presidents nor world class economists can provide.
Plus because the world is 'long only' you are playing with fire as the minute, literally, you look away the market will invert and today the fund managers noticed too many times a move inverting 200% in the other direction, taking your profits and if you do not exit at zero, which most find psychologically impossible, also taking your capital as well.
The theory is nice, the practice is next to impossible for almost everyone, what you really want to do is wait for $6 oil or 18k Dow which both happened, they are known are long-tail (fat-tail) events which statistically cannot happen but happen more than you think, plus there is a simple fact about the markets and finance, when the correction occurs you will be at your lowest liquidity thereby not be able to participate in the recovery.
The trick here is you use the correction to generate some 'seed' capital and then go long at the extreme event which is where you make the core profits, you can do it the other way around but I can assure you that you will not sleep at night and will probably destroy parts of your personal life along the way, the world really doesn't sync very well with contrarian viewpoints.
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