qitdgnd.info

Summary
SPDN is not the largest or oldest way to short the S&P 500, but it’s a solid choice.
This ETF uses a variety of financial instruments to target a return opposite that of the S&P 500 Index.
SPDN’s 0.49% Expense Ratio is nearly half that of the larger, longer-tenured -1x Inverse S&P 500 ETF.
Details aside, the potential continuation of the equity bear market makes single-inverse ETFs an investment segment investor should be familiar with.
We rate SPDN a Strong Buy because we believe the risks of a continued bear market greatly outweigh the possibility of a quick return to a bull market.
Put a gear stick into R position, (Reverse).
Birdlkportfolio

By Rob Isbitts

Summary
The S&P 500 is in a bear market, and we don’t see a quick-fix. Many investors assume the only way to navigate a potentially long-term bear market is to hide in cash, day-trade or “just hang in there” while the bear takes their retirement nest egg.

The Direxion Daily S&P 500® Bear 1X ETF (NYSEARCA:SPDN) is one of a class of single-inverse ETFs that allow investors to profit from down moves in the stock market.

SPDN is an unleveraged, liquid, low-cost way to either try to hedge an equity portfolio, profit from a decline in the S&P 500, or both. We rate it a Strong Buy, given our concern about the intermediate-term outlook for the global equity market.

Strategy
SPDN keeps it simple. If the S&P 500 goes up by X%, it should go down by X%. The opposite is also expected.

Proprietary ETF Grades
Offense/Defense: Defense

Segment: Inverse Equity

Sub-Segment: Inverse S&P 500

Correlation (vs. S&P 500): Very High (inverse)

Expected Volatility (vs. S&P 500): Similar (but opposite)

Holding Analysis
SPDN does not rely on shorting individual stocks in the S&P 500. Instead, the managers typically use a combination of futures, swaps and other derivative instruments to create a portfolio that consistently aims to deliver the opposite of what the S&P 500 does.

Strengths
SPDN is a fairly “no-frills” way to do what many investors probably wished they could do during the first 9 months of 2022 and in past bear markets: find something that goes up when the “market” goes down. After all, bonds are not the answer they used to be, commodities like gold have, shall we say, lost their luster. And moving to cash creates the issue of making two correct timing decisions, when to get in and when to get out. SPDN and its single-inverse ETF brethren offer a liquid tool to use in a variety of ways, depending on what a particular investor wants to achieve.

Weaknesses
The weakness of any inverse ETF is that it does the opposite of what the market does, when the market goes up. So, even in bear markets when the broader market trend is down, sharp bear market rallies (or any rallies for that matter) in the S&P 500 will cause SPDN to drop as much as the market goes up.

Opportunities
While inverse ETFs have a reputation in some circles as nothing more than day-trading vehicles, our own experience with them is, pardon the pun, exactly the opposite! We encourage investors to try to better-understand single inverse ETFs like SPDN. While traders tend to gravitate to leveraged inverse ETFs (which actually are day-trading tools), we believe that in an extended bear market, SPDN and its ilk could be a game-saver for many portfolios.

Threats
SPDN and most other single inverse ETFs are vulnerable to a sustained rise in the price of the index it aims to deliver the inverse of. But that threat of loss in a rising market means that when an investor considers SPDN, they should also have a game plan for how and when they will deploy this unique portfolio weapon.

Proprietary Technical Ratings
Short-Term Rating (next 3 months): Strong Buy

Long-Term Rating (next 12 months): Buy

Conclusions
ETF Quality Opinion
SPDN does what it aims to do, and has done so for over 6 years now. For a while, it was largely-ignored, given the existence of a similar ETF that has been around much longer. But the more tenured SPDN has become, the more attractive it looks as an alternative.

ETF Investment Opinion

SPDN is rated Strong Buy because the S&P 500 continues to look as vulnerable to further decline. And, while the market bottomed in mid-June, rallied, then waffled since that time, our proprietary macro market indicators all point to much greater risk of a major decline from this level than a fast return to bull market glory. Thus, SPDN is at best a way to exploit and attack the bear, and at worst a hedge on an otherwise equity-laden portfolio.

Businesses around the world invest, or to be more precise, they spend, untold numbers of dollars to advertise, market and promote their products and services to make sales and gain new clients. In an economic downturn these expenditures may be reduced due to cost constraints and consumer reluctance to buy.As an example it costs around $1,000usd for a small classified advertisement in the weekend editions of major USA newspapers, $2-3,000usd for a similar placement in monthly travel magazines. Radio spots, from ‘cheap and nasty’ during the hours when nobody is really awake to prime time messages to thousands, the majority of whom may not be interested and many of the rest may just go to a competitor. In effect, business advertisers may often pay for ‘lack of performance’. Either the advertising copy was ineffective or the reach of the medium and quality of the audience was ineffective.In other fields of endeavour we work, perform, produce and then get paid. Why not in advertising?It may be the time to rethink the effectiveness of our advertising spend and to rethink who we spend it with, what we spend it on, when we should spend it, where we should spend it, why we are spending it, how we should spend it? Or even, ‘if’ we should spend it.In other words, how can we get more value from our advertising spend? Is there a better way?The internet affords us all exceptional opportunities to showcase our wares but the same problem arises: how do small businesses let the world know about their own websites when contending with the major players who are always able to buy more ‘googling’ stuff than they can?As well as being approached by media reps from local to national newspapers and magazines, small businesses now get inundated with internet offers such as: ‘top 10 search engine rankings for your website; 50,000 hits guaranteed; increased visits assured with our email programs to our double opt-in email clients.’ And so on and so forth. The emails arrive daily to inboxes everywhere.Businesses do not want looky-loos clogging up their websites. They want committed buyers to review and compare their products to others. They do not want to give their hard-earned money to advertisers who simply want to sell advertising space. They want advertising partners.Businesses should be given the opportunity to work with a ‘pay for performance’ option for their own advertising spend. In other words, “work with me, perform with me, produce with me, get results with me and then bill me.” The P4P partnership could generate more advertising revenue than the old system of “just pay, shut up, wait and be thankful for what you get.” Let’s consider a P4P arrangement where a percentage of sales is given to advertisers who produce sales. Many businesses might welcome such an opportunity to partner with forward-thinking advertisers. Just consider how much more advertising copy could be placed.An example:
A business that operates websites that offer travel in over 70 countries and with products available to travellers in all countries. This company needs to advertise in every country, in all traditional media and in all e-commerce media such as e-newsletters, ezines and websites plus tv, radio and of course the electronic social media. To do this would take an enormous budget, which is not available, but to do this on a P4P arrangement could lead to sales growth that could never be realized with the traditional methods. There could be many similar businesses around the world that could also grow more quickly. Advertisers who are willing to accept a radical change in their business practices by operating a P4P option could also benefit from the business growth of the thousands of global businesses that would embrace this innovative new concept. Sharing the risk of both success and failure. End of example.The way we now advertise, market and promote business must change. Advertisers should consider P4P and share the risk and the greater rewards for performance. The advertising industry could experience more business, more profits and lead global economic recovery.More global businesses will readily accept a P4P partnership. Businesses and advertisers can perform together and make better returns for both by sharing the risk and producing improved sales. However, the P4P format should only be implemented when both parties agree that it could produce better incomes for both parties. If advertisers consider that there would be no benefits for them with a P4P arrangement, the business has to also rethink their own advertising methods and lack of confidence of the advertiser for declining the arrangement. A catch 22, but real world.Although most businesses do not want window shoppers, looky-loos, timewasters, or those who unfortunately cannot afford to buy, they must also be aware that, in travel anyway, “today’s backpacker may be tomorrow’s luxury travel buyer” and should be nurtured and even developed as future customers. A P4P partnership of media and business could develop improved campaigns leading to healthier long-term business growth for all partners.A recent real case example for internet advertising is as follows:
An internet marketing company stating that they had ‘a list of 3,000,000 enthusiastic travellers’ recently approached a local business. Before even asking for the cost of using their services the business owner switched the tactics by offering them the opportunity to send their message to this list over a period of months, but on a P4P basis (at their cost). The business owner offered to pay them $10usd per sale (out of a $35 total sale). Their comments, “we do not do business that way.”The retort from the business owner: “if you are not prepared to try and get 1% (yes one percent) of your database to buy my offer (30,000 x $10 = earnings of $300k), it appears to me that you do not have any confidence in your own database, my offer, or my product, but you would take my money upfront even though you have no belief in the success of the mailing. This is not the way I want to do business and you are not the company I want to do business with.”If advertisers believe that your advertisement will work for you why would they not want to earn a better income from a P4P arrangement? Or do they really have an in-house ethical conflict between editorial and advertising departments? If so, what are advertorials and the published press releases sent from public relations agencies?Over the years all types of businesses have been convinced by all forms of media to advertise but rarely are they asked to assess the results of the advertisement. Advertisers keep taking the money. Businesses keep on doing the same thing because they have been convinced that they need to be seen and to “do it this way.” Well, maybe it’s time for a change.The present economic climate is causing stress and strife around the world. Advertisers could find that they have so much white space available forcing them to print thinner newspapers and to offer discounted rates to their recession-proof clients. But what if these advertising agencies and media outlets started to work on a P4P basis with all types of businesses to create new partnerships of media and frontline operations from restaurants to who knows what? A win for the media, a win for the businesses and a win for the buyers who stay informed and are kept aware of local, regional or international opportunities. And maybe full staffing, thick papers and magazines, robust ezines and e-newsletters that will make us all feel more confident about the economy.Not all situations will allow a p4p partnership but there are enough out there to reward all parties and all we need to do is develop simple operating systems to make this new way attractive and secure for all participants.The business in the example above could operate on a P4P basis. It could have a P4P arrangement with many different partners in many different countries at the same time. Any downside for the media partners would be minimized by their thorough understanding of the business services and products. They would know the wants and needs of the business and so be in a position to not just accept an advertisement but to be totally involved in the generation of leads and buyers. All partners could get the maximum benefit from the opportunity because the only way to earn revenues is to produce results by better use of skills, creativity, contacts and advertising reach.A simple method for internet businesses is for unique pages or URLs to be set up for each P4P operation so that accurate assessments can be made of the specific promotion and the fees based on the same statistics and buyers. Another ‘comfort-zone’ action could be for the media P4P partner to collect the ‘gross takings’ and to remit the net after deductions, to the other partner. Vouchers can be created giving all parties an audit trail. Trust is paramount in P4P partnerships.Many small businesses will survive and help save the global economies. Big business will continue heavy layoffs, cutbacks and corrections until the good times roll again, which could be a long way into the future. Let’s take action now.Small business together with Small Internet Media (e-newsletters, ezines) and other Smart Media can try new ways to pull us all out of the economic mire. If they seriously consider this new way of advertising, marketing and promotion ‘with’ their clients, not ‘for’ their clients, they can “get going now, or they can sit back, take no risks, take no chances, ignore P4P opportunities, downsize, get laid off, change careers, move away or just keep doing the same old thing and stagnate.”Thousands of businesses around the world would welcome approaches from all forms of media to advertise, market and promote within a P4P partnership arrangement. This could be a simple way to not only help business survival in the recession but will enable us to prepare for future growth.We go to work, perform our duties, finish the job, produce results and then we get paid. Why then should we not expect to pay only for the ‘results’ of’ our advertising and not just ‘for’ advertising?Imagine the global acceptance of P4P. Businesses would be able to advertise anywhere and would never again have budgetary restrictions to advertise, market and promote sales. Media businesses would be getting new clients from places that they would never have considered and at the same time, helping their own clients to expand. Why don’t we do it?Just because; “We don’t do business that way” is unacceptable!The positive side of an economic downturn is that new opportunities arise for creative and progressive entrepreneurs to start new ventures such as P4P advertising. They are out there.