20-20 hindsight now shows that the US stock markets have been down 3 out of the past 4 weeks, and that many European and Asian stock markets have been down for all 4 of the past 4 weeks, and that monday morning futures are showing a sub 15,000 opening for the Dow. So it's probably worth asking the question whether this is a temporary downward 'blip' which will soon be erased, or the beginning of a new downward trend that will bring even more losses in the near future.
If you believe this is only a 'blip', then no worries. But if you believe, as many pundits now speculate, that May 23rd marked a 'turning point', then the question arises as to what else to do with your stock investment money if you choose to sell.
One very safe option is to simply withdraw the proceeds of your stock sales and transfer it into an FDIC insured bank CD. This option is guaranteed to stop future losses, but returns next to nothing in the way of interest earnings. And since most brokerage accounts cannot offer an FDIC insured CD, this option is also likely to cost you wire transfer fees between your brokerage account and your bank account.
Another safe option is to transfer the proceeds of your stock sales into a money market mutual fund offered by your brokerage account. This option will be free of fees, but does pose a remote risk of principal loss should the short term corporate 'paper' held by such mutual funds suffer significant price declines. But, as with a bank CD, while it will avoid potential additional future losses when stock markets are declining, the money market mutual fund option provides near zero opportunity for additional earnings.
It IS possible to profit from declining stock ( and bond ) markets. Serious investors can make short sales, can purchase put options, can purchase futures contracts etc. But 'small time' investors typically do not have the ability to take advantage of these instruments via their basic brokerage account. However there is now the alternative of 'inverse' Exchange Traded Funds'. These inverse ETF's trade in exactly the same way as stock shares. These inverse ETF's consist of options contracts, futures contracts, short sales and other financial instruments ... which attempt to provide an 'inverse' price change versus the index they track. Or, to cite a specific example, if the Dow declines 1%, inverse Dow ETF DOG will increase by 1%. There are also more highly leveraged inverse ETF's that attempt to produce a 2x and 3x price gain versus a decline in the underlying index.
You might want to have a look at ... and particularly some of the informational ETF links at the bottom of the page.
Obviously, if stock markets do continue to decline, owning inverse ETF's presents a way to MAKE money ... as opposed to just limiting potential future losses via CD's or money market funds/



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