Last Updated on 9 January 2021 by F.R.Costa

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.


About F.R.Costa

Filipe has more than 20 years experience with financial markets. He holds a degree in Economics with a specialisation in Finance and he's currently finishing a PhD in Finance. He used to work as financial consultant and research associate but then decided to return to academia five years ago. Since that, he has been an Invited Lecturer, teaching courses on Investments, Financial Markets, and Monetary Economics. He is also a regular contributor writer at The Master Investor Magazine.

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