SH: A Dangerous Way To Position For A Crash
Stuart Allsopp, 21 May 2021
I fully expect U.S. stocks to decline sharply over the coming months and potentially years as the extreme level of valuation and bullish sentiment cannot be maintained indefinitely. I have written about the risks of major losses in the S&P 500 and other indices a number of times over recent months and I remain fully convinced that we are on the precipice of a market crash and/or a long-term bear market. See ‘VTI: Rising Inflation May Burst This 3-Sigma Bubble’ for my most recent article on U.S. stocks, or ‘SPX: Don’t Be Suckered In By ‘Low’ Forward P/E Ratios’ for my take on the S&P 500 in particular. That said, I do not think being long the ProShares Short S&P 500 ETF (NYSEARCA:SH) is a good way to take advantage of the upcoming equity weakness.
SH Is A High-Risk Option For Gaining Downside Market Exposure
Risk management is equally, if not more, important than getting the major market moves right, and the SH is a high-risk option. Even for those investors with little alternative to get exposure to S&P 500 downside, I would not recommend this ETF other than for savvy market timers who intend to hold their position for a matter of days rather than weeks or months. Continue reading “Article: SH: A Dangerous Way To Position For A Crash”
