In this week’s Macro Theme, we review our “Slowing Dragon” theme. We began discuss...
Ranger Targets Bears
05/05/2016 9:00 am EST
In response to requests from a number of subscribers, I have decided to add a “short” ETF to our portfolio, explains Nate Pile, editor of Nate’s Notes.
After spending a great deal of time weighing the pros and cons of heading down this path, we are recommending AdvisorShares Ranger Equity Bear ETF (HDGE).
However, please consider the following caveats, if you consider adding it to your own portfolio as well.
First and foremost, I want to make it clear that, our recommendations typically include an initial time-horizon in the three- to five-year range.
This ETF, however, is being recommended strictly as a shorter-term “investment vehicle”.
Once we get some clear-cut evidence that the market wants to head higher, we will be selling our position in HDGE rather than hanging onto it for an extended period of time.
Second, please realize that this recommendation is being made only for more aggressive investors.
If you are risk-averse or have never even thought about the idea of trying to make money during a market decline, then it is okay to simply “hold some cash” rather than trying to “get fancy” by buying an ETF that attempts to generate positive returns by shorting stocks.
That being said, after taking a look at a number of different possible ways to bet on a market -- and despite the hefty 2.9% management fee charged by this ETF -- I have decided that owning shares of HDGE is probably the best way to go.
The AdvisorShares Ranger Equity Bear ETF is a bet on a market decline that actually shorts individual equities rather than via the purchase of put options and/or other derivatives.
It looks for companies with low earnings quality or aggressive accounting. It also
seeks to identify earnings driven events that may act as a catalyst to price declines.
Our involvement with HDGE may prove to be short-lived. But if the current rally does fizzle out before new highs are set, the current price may prove to be a great entry point.
By Nate Pile, Editor of Nate’s Notes
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