– The theory here is that there are a ton of boomers out there with fat IRAs.
– Short-selling is not allowed in an IRA.
– But the markets are inevitably going to correct before their retirement. (assumption)
– They don’t want to lose all kind of money and potential Harley Davidsons.
– So they pack their portfolios with inverse ETFs so they profit when the market declines.
– Bonus Points: First buy an Inverse ETF for Chinese indexes and when they enter decline, do the same for the USA. You might call this the “Double Inverse Knife Catch Technique.” Observe, you don’t catch two knives at once. You catch one and then the other because one or the other economy will decline first and the other will invariably follow.
If all goes well: Sweet, Sweet Harleys and Jimmy Buffet cruises.
Cons: Inverse ETFs aren’t known as great long term investments. Holding this strategy for an even year could be rather expensive and those calculations are beyond my cursory knowledge.
Take it for what it’s worth, fellas. This is just a light-hearted proposal. Please don’t just go out and do this. But here we are in 2019 at the height of a stock bubble… maybe. Is this technique just crazy enough to work?
Disclaimer: Consult your financial professional before making any investment decision.