Many small investors may know that you can also make your savings profitable through downward movements of equities, the reverse stock market. It is a new option that has been opened in recent years as a result of the dynamism generated by financial markets. And that not only serves to open positions in the stock market, but in other highly popular financial products (warrants, investment funds or listed products, among others).
As a result of bearish movements in the markets, you will no longer have to wait for the trend in financial assets to change to obtain capital gains. Even in the worst scenarios you will be in a position to obtain a significant return on your positions. In this way, in all positions you can operate to improve the general status of your personal accounts.
This year has been very difficult for the more traditional investors due to the erratic evolution that equities are having, not only Spanish, but of all international stock markets. The many doubts that the international economy shows have been transferred to the markets immediately. Currently it is more difficult to get a few euros of profit from the traditional operations of buying and selling shares. Coming even to the despair of retail investors.
But faced with this somewhat disappointing trend that the stock market presents, you should not worry excessively since from now on you will be able to open reverse positions. What are these movements? We will explain them to you so that you can benefit from them, and especially on which financial products you can apply them. Because they are not limited exclusively to the stock market, but more alternatives are opened if you want to invest your savings from now on.
What are reverse moves?
They are called like that when you take advantage of the falls in the financial markets to take positions. While the declines are more pronounced, the better it will be for your interests. Or what is the same, you will obtain more capital gains in open operations. It can affect an index, sector or equity value. As a consequence of this unique investment strategy, a highly unfavorable scenario for the stock markets may be the best news you have if you have enough mechanisms to operate correctly.
If the evolution of the benchmark stock index, the Ibex 35, maintains decreases of 15%, it will mean that this will be the approximate percentage of profits you will have. You no longer have to wait for the trend to change financial markets, but you can make your operations under any trend, even the most unfavorable.
These are movements in the stock market with which profits can be very high, above what is usual in traditional operations. But be very careful in the operation, because you can also leave a lot of euros on the way. Not surprisingly, they are operations that carry many risks. Especially if investment expectations are not met. And that only the most experienced investors are in a position to open positions with certain guarantees of success.
Reverse stock trading
If your desire is to open reverse positions on the securities that are listed on the equity markets, you will have it more difficult. Products are more limited, and you will have to be content with a couple of proposals for investment. The reverse positions have not yet reached the purchase and sale of shares, and you will have no choice but to turn to other proposals, in some cases even more aggressive due to the nature of their designs.
One of these models is warrants. It is a highly sophisticated investment product that is basically a derivative financial instrument or contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price at a specified future date. You can do it on bullish (put) or bearish (call) positions.
And the financial asset on which you can operate will normally be a security or stock index, but also from other financial markets. From raw materials to precious metals, and where foreign exchange is another of the most common alternatives to make operations profitable through these highly specialized products.
Inverse investment funds
It is the most practical way to take advantage of the bearish movements of the financial markets. Not in vain, there are several models that meet this unique characteristic, especially linked to international equities. These are investment funds that base their profitability on the fall of the stock indices to which they are linked.
And that their investment portfolio can be enhanced, albeit minimally, with other financial assets from fixed income. Your hiring, in any case, it will not entail additional costs, since they maintain the same commissions as in other investment funds of a different nature. And with the advantage that you can transfer them to other funds of different composition when the downtrend of the stock market is exhausted.
In addition, and as a formula to protect the interests of your assets, you can diversify them with other models in their management. Traditional fixed and variable income, alternative funds and even more innovative models will be some of the proposals that you can find through the offer of funds that your bank or financial intermediary will provide you. Conforming, in this way, a balanced investment portfolio and open to all scenarios that arise.
ETF, with inverse models
Another of the financial products that keeps these constants in their hiring are the exchange-traded funds. But with one more incentive, and that you can not only subscribe investor ETFs, but ultrainverted. They are more aggressive, and with an even greater risk, that only in certain scenarios can you consider opening positions. Not surprisingly, the benefits will be greater, but also the losses, until reaching very dangerous levels. And that only investors with more experience in the markets can bear.
In any case, there are many of these products that can be purchased by customers at all times, taking advantage of the decline in the main financial markets. Of all, they are conceived for very short terms of stay, that are adapted to the duration of these scenarios.
If you are going to opt for any of these products, you will have no choice but to exchange traded funds. mix between buying and selling shares on the stock market and mutual funds. It provides the best and worst of these models, although with less expansive commissions than in these models. And that can be very interesting to protect your money and to open positions in a specific scenario of stock market panic, or at least with a very pronounced downtrend.
Credit sales
If you are not willing to give up the stock market under the most bearish scenarios, you will have in credit sales the last resort to make your monetary contributions profitable. This product, also very sophisticated in its design, is the type of operation in which payment is made in the medium or long term, after the acquisition of the good or service. And that in this particular case refers to a value, sector or index derived from equities.
If you want to operate with these products, it will be very necessary that you have some experience with them, so that you know what the operation entails. It is not easy to apply on many occasions, and any calculation error can cost you many euros when liquidating the operation. Not in vain, caution should be the main denominator of your operations, and always under minimal contributions that do not endanger your personal assets.
Some tips for trading down
It will be very convenient that you be aware of the possibility of an imminent change in the trend of the stock markets, which can go at any time from bullish to bearish, and vice versa. And as a consequence, get the most out of these movements. Once detected, opt for the best products that reflect this trend, both in shares on the stock market, and in other financial assets (gold, currencies, oil, etc.).
- The only requirement that you must have is the certainty that the stock market is really immersed in a downward process of great depth, to direct the savings towards any of these financial products that we have explained in this article. And knowing at all times that the risk you will take in these operations it will be much higher than through conventional models based on equities.
- Don't forget that they are about more specialized investment instruments, which are intended only for investors with more experience in the markets. It is not a model, on the contrary, suitable for small investors who do not have a certain financial culture, and less who are not used to operating with these products.
- The managers have designed a wide variety of funds of these characteristics, where the most representative indices and stock market sectors are generally contemplated, and almost never shares of one or more companies. They are more complicated products to understand, where the customer will need to be certain that the stock market will depreciate in the coming months. To finally opt for the most suitable investment model for each occasion.
- This kind of investment should not be constituted as an end in itself, but rather as a complement to your usual operations. And that will allow you, in the last case, to take advantage of all possible scenarios. And not only from the bulls, as you have been doing in recent years. And where you will find more and more sophisticated designs.