Passive Strategies For Market Chaos

Passive Strategies For Market Chaos

With the Covid-19 still spreading, I prefer to stay on the safe side. Article originally published at Master Investor Magazine April 2020 Issue 61 p. 20-25.

Whether the current bear market will trigger a full blown crisis or just be easily reverted, we don’t know. One thing is for sure, selling at these times is never a good option for long-term investors. And even for those who tried, it may proved too late, as it took just 17 sessions for the S&P500 to loose 20%. Such figures contrast with a number of 189 for the 2007-2009 financial crisis.

Even though the financial crisis of 2007-2009 was severe, investors still had more time to sell equities than they have had during the current crisis.

Are we living in an event-driven downturn or are we at the start of a cyclical recession? We don’t know yet. Covid-19 may affect the world only temporarily but its effects could be long-lasting, in particular if the lockdown period extends for a long time and demand remains low.

Instead of trying to pick the bottom and go all-in in equities, I propose four different passive investment alternatives, that are neither too dependent on a market recovery nor exposed to a continued downtrend:

  • ProShares Long Online/Short Stores ETF (NYSEARCA:CLIX)
  • Direxion S&P 500 High Minus Low Quality ETF (NYSEARCA:QMJ)
  • IQ Real Return ETF (NYSEARCA:CPI)
  • Amplify BlackSwan Growth & Treasury Core ETF (NYSEARCA:SWAN)

You may read the full article, Passive Strategies For Market Chaos, on the Master Investor Magazine, as usual.


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