Ways to bet against the stock market
Join the NASDAQ Community today and get free, instant access to portfolios, stock ratings, real-time alerts, and more! Some, such as Jim Chanos of Kynikos Associates, have been sounding alarms sincewhen he branded China as "Dubai times ".
Wouldn't it be nice to be able to bet against the Chinese stock market? The country, and likely the Chinese stock market, escaped a collapse in growth around by force-feeding the economy with massive amounts of credit, causing a build-up of capacity along with a surge in debt.
Growth has slowed, but debt still rose in To keep growth from buckling, the People's Bank of China cut interest rates six times inand the fiscal deficit is widening.
That said, it's still not too late to hedge against further chaos in the Chinese stock market. Here are four ways investors can prepare their portfolios for turbulence in the world's second-largest economy.
4 Ways to Bet Against the Chinese Stock Market in | InvestorPlace
Treasuries are considered a "safe haven" investment, because they are highly liquid and backed by Uncle Sam himself. Whenever investors become more nervous about global risk, they move their money to the comparative safety of U.
Treasuries, causing the price of bonds to increase. If you decide to bet against the Chinese stock market in by purchasing Treasury securities, you're in good company. Bond yields are very low, and bond prices are high, by historical standards. While worries in the markets may keep bond prices up for a while longer, there is a risk that the Fed will raise rates, making bonds already issued less attractive and causing bond prices to fall.
There is also the risk of inflation, which is also higher for long-term bonds. Small-cap miners like Yamana Gold AUY can magnify gains even more due to their small size and leverage. Short-selling is riskier, as it exposes the investor to potentially unlimited losses but only finite gains.
How to Bet Against the Bond Market
The CBOE Volatility Index VIX is a measure of volatility expectations; it is known as the "fear index" for this reason. When the market expects more turbulence, the Volatility Index goes up; when the market expects a calmer atmosphere, VIX goes down.
Let's say the China stock market is plunging for whatever reason: The VIX spiked in Septemberin August during japan stock market 2016s US debt ceiling crisis, and soared again last August as investors repriced downside risk.
Investors can seek exposure to the Volatility Index by buying futures contracts. However, one should note that VIX futures often underperform the Volatility Index, because of contango. He writes that "for investors looking to hold VIX ETPs for longer than a very short period, these investments have serious drawbacks. At the end of the day, there are a number of different ways to hedge against a decelerating Chinese economy, or even indirectly bet on falling Chinese stock markets.
How to Bet Against Stocks
Ways to bet against the stock market will just have to ways to bet against the stock market the method that works best for them. As of writing, Lucas Hahn did not hold a position in any of the aforementioned securities. The post 4 Ways to Bet Against the Chinese Stock Market in appeared first on InvestorPlace.
The views and opinions expressed herein are the views and opinions of the cnbc market guide stock market hindi and do not necessarily reflect those of Nasdaq, Inc.
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How Can I Bet Against the Stock Market? - funancials
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