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The 2015 war between Bulls and Bears is certainly spilling over into 2016, with the Bears brutally mauling Santa before he got home. Stock markets are rather binary, in that we either have a Bull or Bear market, so there really can only be one winner. However, we do not have any official Bear Market now either. As of this moment, it is not safe to be either a Bull or Bear (at least over the medium- to long-term horizon. Especially when you consider how the self-assure 2015 August Bears got stampeded by the Bulls in October. I will now show you two ETF’s that are market neutral, and that could give you some solace in these trying times.
1. QuantShares US Market Neut Momentum (MOM)
MOM is long/bull stocks with highest momentum, and goes short/bear stocks with lowest momentum. This is an absolute return ETF, and while the S&P 500 is down -3,85% over the last 12 months (as of 7.1.2016) MOM is up 16,59%. So, if this market hurt you, then you can come running to MOM.
2. QuantShares US Market Neut Anti-Beta (BTAL)
BTAL is long/bull stocks with lowest beta, and goes short/bear the stocks with highest beta. QuantShares categorize this as a hedging ETF, and this one is up 6,09% over the last 12 months.
When comparing their charts against the S&P 500, we do see that they do not correlate too closely, and that these ETF’s are true to their market neutral purpose. These ETF’s are relatively new to the market, and the trading volume is still modest. However, given the age of the current Bull Market, chances are high that these kinds of ETF’s will increase in popularity. While it is not true that Bull Markets die of old age, it certainly is true that they become more fragile as they age. Which is exactly what we see now!