What Will You Do if the Bear Is Here? Part II
Yesterday’s huge drop in stocks — the Dow and S&P 500 both sank over 1.5%, while the Nasdaq plunged over 2% — reminded us all that the prospect of a correction, and very possibly the start of a bear market, is present, and very real.
In last week’s issue of the Making Money Alert we discussed the basic preparations every investor must make if they want to survive the next bear market. We explained that the first thing everyone needs to realize is that they must have a bear market investing strategy in place. We explained that this includes preset stop-losses on all equity positions, as well as the willingness to use unconventional investment vehicles.
This week I want to go into greater detail on those unconventional investment vehicles. But first, let’s talk about one vehicle that you have to have in place first if you plan on surviving any bear market, and that is cash.
The first step in surviving a bear market is to have your money on the sidelines, in the safety of cash. You can’t successfully negotiate a bear market while being 100% invested in equities, and that means you’ve got to have a high cash position.
Once you’ve got your cash protected and ready for the next move, that next move may, in fact, be into funds that move in the opposite direction of a major market average. These are the so-called "bear market funds" out there, and they are all designed to move up when the indices they track move down.
To help our subscribers keep track of these unconventional investment vehicles, we’ve created the Fabian Bear Market Funds Report, available exclusively to subscribers of our services.
This is the very report that helps me determine if the time is right to go bearish with my investments. Below is an excerpt of our most recent Bear Funds Report:
| TICKER | Name | Beta | Index | Price | % Chng | 1WK% | 4WK% | 8WK% | 12WK% | YTD% | 50D% | 200D% |
| Bear Funds | ||||||||||||
| BEARX | Prudent Bear | -1 | – | 6.04 | 2.03 | 0 | 2.72 | 6.53 | 7.28 | 11.85 | 4.37 | 9.52 |
| PSPSX | Potomac U.S./Short | -1 | S&P 500 | 27.62 | 1.62 | -0.18 | 4.54 | 4.34 | 2.33 | 0.73 | 3.38 | 1.38 |
| SHPIX | ProFunds Short Small Cap Inv | -1 | Russell 2000 | 18.29 | 2.64 | 0.05 | 8.22 | 7.78 | 2.24 | -3.99 | 6.15 | -2.27 |
| BRPIX | ProFunds Bear Inv | -1 | S&P 500 | 30.11 | 1.62 | -0.23 | 4.48 | 4.37 | 2.38 | 0.9 | 3.35 | 0.48 |
| SOPIX | ProFunds Short OTC Inv | -1 | NASDAQ 100 | 19.96 | 2.31 | -0.05 | 7.89 | 10.22 | 7.14 | 6.8 | 7.26 | 7.08 |
| RYAIX | Rydex Arktos Inv | -1 | NASDAQ 100 | 23.84 | 2.23 | -0.04 | 7.87 | 10.12 | 7 | 6.71 | 7.2 | 6.87 |
| RYMHX | Rydex Inverse Mid Cap | -1 | S&P Mid 400 | 39.22 | 1.61 | 0 | 7.07 | 6.03 | 2.43 | -0.13 | 5.12 | 0.8 |
| RYURX | Rydex Ursa Inv | -1 | S&P 500 | 8.36 | 1.7 | -0.12 | 4.63 | 4.5 | 2.58 | 1.09 | 3.49 | 1.78 |
| RYSHX | Rydex Inverse Small Cap | -1 | Russell 2000 | 39.98 | 2.51 | 0.08 | 8.05 | 7.68 | 2.17 | -3.92 | 6.02 | -0.56 |
As you can see, you get all of the performance data for these, plus dozens of other bear market funds in one easy-to-read, easy-to-understand report. Don’t you want to know which funds are doing well when everyone else’s stocks are drowning? Well, that’s what the Fabian Bear Market Funds Report is all about.
For more on how we use bear funds, stop-losses and our proprietary trend-following strategy to achieve market-beating returns in Successful Investing, click below:
Jim Woods is a 30-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.
His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. Read more about Jim Woods.
