Dealing With the Ups and Downs of Investing

Inverse exchange-traded funds (ETFs), which effectively bet against a particular index, may be useful in various strategies. You can use long-short strategies to dampen portfolio volatility and look for excess return from a selected investment.

Suppose, for example, you think that IBM will outperform the tech sector. In that case you might go long IBM stock and buy an inverse ETF linked to a technology stock index. That will produce profits if IBM outperforms, regardless of how the broad tech sector does.

If you go to Websites like www.etfconnect.com that list exchange-traded funds, you can recognize the inverse ETFs because they are the ones with the word "short" in their names.

* * * * *