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SPDN: An Inexpensive Way To Profit When The S&P 500 Falls

Summary
SPDN is not the largest or oldest way to short the S&P 500, but it’s a solid choice.
This ETF uses a variety of financial instruments to target a return opposite that of the S&P 500 Index.
SPDN’s 0.49% Expense Ratio is nearly half that of the larger, longer-tenured -1x Inverse S&P 500 ETF.
Details aside, the potential continuation of the equity bear market makes single-inverse ETFs an investment segment investor should be familiar with.
We rate SPDN a Strong Buy because we believe the risks of a continued bear market greatly outweigh the possibility of a quick return to a bull market.
Put a gear stick into R position, (Reverse).
Birdlkportfolio

By Rob Isbitts

Summary
The S&P 500 is in a bear market, and we don’t see a quick-fix. Many investors assume the only way to navigate a potentially long-term bear market is to hide in cash, day-trade or “just hang in there” while the bear takes their retirement nest egg.

The Direxion Daily S&P 500® Bear 1X ETF (NYSEARCA:SPDN) is one of a class of single-inverse ETFs that allow investors to profit from down moves in the stock market.

SPDN is an unleveraged, liquid, low-cost way to either try to hedge an equity portfolio, profit from a decline in the S&P 500, or both. We rate it a Strong Buy, given our concern about the intermediate-term outlook for the global equity market.

Strategy
SPDN keeps it simple. If the S&P 500 goes up by X%, it should go down by X%. The opposite is also expected.

Proprietary ETF Grades
Offense/Defense: Defense

Segment: Inverse Equity

Sub-Segment: Inverse S&P 500

Correlation (vs. S&P 500): Very High (inverse)

Expected Volatility (vs. S&P 500): Similar (but opposite)

Holding Analysis
SPDN does not rely on shorting individual stocks in the S&P 500. Instead, the managers typically use a combination of futures, swaps and other derivative instruments to create a portfolio that consistently aims to deliver the opposite of what the S&P 500 does.

Strengths
SPDN is a fairly “no-frills” way to do what many investors probably wished they could do during the first 9 months of 2022 and in past bear markets: find something that goes up when the “market” goes down. After all, bonds are not the answer they used to be, commodities like gold have, shall we say, lost their luster. And moving to cash creates the issue of making two correct timing decisions, when to get in and when to get out. SPDN and its single-inverse ETF brethren offer a liquid tool to use in a variety of ways, depending on what a particular investor wants to achieve.

Weaknesses
The weakness of any inverse ETF is that it does the opposite of what the market does, when the market goes up. So, even in bear markets when the broader market trend is down, sharp bear market rallies (or any rallies for that matter) in the S&P 500 will cause SPDN to drop as much as the market goes up.

Opportunities
While inverse ETFs have a reputation in some circles as nothing more than day-trading vehicles, our own experience with them is, pardon the pun, exactly the opposite! We encourage investors to try to better-understand single inverse ETFs like SPDN. While traders tend to gravitate to leveraged inverse ETFs (which actually are day-trading tools), we believe that in an extended bear market, SPDN and its ilk could be a game-saver for many portfolios.

Threats
SPDN and most other single inverse ETFs are vulnerable to a sustained rise in the price of the index it aims to deliver the inverse of. But that threat of loss in a rising market means that when an investor considers SPDN, they should also have a game plan for how and when they will deploy this unique portfolio weapon.

Proprietary Technical Ratings
Short-Term Rating (next 3 months): Strong Buy

Long-Term Rating (next 12 months): Buy

Conclusions
ETF Quality Opinion
SPDN does what it aims to do, and has done so for over 6 years now. For a while, it was largely-ignored, given the existence of a similar ETF that has been around much longer. But the more tenured SPDN has become, the more attractive it looks as an alternative.

ETF Investment Opinion

SPDN is rated Strong Buy because the S&P 500 continues to look as vulnerable to further decline. And, while the market bottomed in mid-June, rallied, then waffled since that time, our proprietary macro market indicators all point to much greater risk of a major decline from this level than a fast return to bull market glory. Thus, SPDN is at best a way to exploit and attack the bear, and at worst a hedge on an otherwise equity-laden portfolio.

Why is Nutrition Important – 3 Reasons Why Good Nutrition is So Important?

If you want to improve your nutrition, there are three things you need to know, to live a longer and healthier life. They are a balanced diet, the nutritional value of your food and the exercise you do.I will explain each of them in this article, and show how you can use them to achieve your own nutritional goals.Why Is Nutrition Important in a Balanced Diet?
Obtaining a balanced diet is only worthwhile if you make sure that the food you eat has real nutritional value and you do sufficient exercise to complete the circle.A balanced diet requires eating a good variety of whole foods – fruit, vegetables, grains and protein sources such as beef, chicken and fish.Our bodies are about 70% water and need a regular supply of water to maintain the optimum level. We can live without food for some time, but not water.Why Is Nutritional Value Important?
Increasing the nutritional value of your food requires avoiding highly processed foods and reading of food labels to ensure that the food contains what we expect and does not contain hidden sugars, saturated fats and sodium.
Much of the food available to us is so processed that it retains very little of the original nutrients. We need to search for food that retains its nutritional value to us and eat a much higher percentage of this type of food.
In general, we should avoid drinks with additives, such as sugar and flavouring or keep them to a minimum. Soft drinks will provide the liquid we need, but have limited nutritional value, so are best avoided.Why Is Nutrition Important for Exercise?
Exercise should be considered as a very important part of a nutrition triangle which include the food we eat and the water we drink. Sufficient exercise is vital to our well being.Exercise consumes calories that we need to replenish, or use to remove fat stored in the body. High levels of exercise require an equivalent level of nutrition to maintain a healthy balance.The quantity of water we require will increase with the level of exercise, and our calorie consumption also increases with our exercise level.We gain energy from the food we eat, so it is important to eat sufficient food with good nutritional value. A balanced diet results when we eat a very good variety of food.If we wish to lose weight, we can use exercise to burn up excess calories and monitor our nutritional intake to maintain or improve our health.We need to balance the level of our exercise with our nutritional and water intakes.