SPDN: An Inexpensive Way To Profit When The S&P 500 Falls

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.

What We Have Here Is A Failure To Communicate

The results of this past election proved once again that the Democrats had a golden opportunity to capitalize on the failings of the Trump Presidency but, fell short of a nation wide mandate. A mandate to seize the gauntlet of the progressive movement that Senator Sanders through down a little over four years ago. The opportunities were there from the very beginning even before this pandemic struck. In their failing to educate the public of the consequences of continued Congressional gridlock, conservatism, and what National Economic Reform’s Ten Articles of Confederation would do led to the results that are playing out today.. More Congressional gridlock, more conservatism and more suffering of millions of Americans are the direct consequences of the Democrats failure to communicate and educate the public. Educate the public that a progressive agenda is necessary to pull the United States out of this Pandemic, and restore this nations health and vitality.

It was the DNC’s intent in this election to only focus on the Trump Administration. They failed to grasp the urgency of the times. They also failed to communicate with the public about the dire conditions millions have been and still are facing even before the Pandemic. The billions of dollars funneled into campaign coffers should have been used to educate the voting public that creating a unified coalition would bring sweeping reforms that are so desperately needed. The reality of what transpired in a year and a half of political campaigning those billions of dollars only created more animosity and division polarizing one extreme over another.

One can remember back in 1992 Ross Perot used his own funds to go on national TV to educate the public on the dire ramifications of not addressing our national debt. That same approach should have been used during this election cycle. By using the medium of television to communicate and educate the public is the most effective way in communicating and educating the public. Had the Biden campaign and the DNC used their resources in this way the results we ae seeing today would have not created the potential for more gridlock in our government. The opportunity was there to educate the public of safety protocols during the siege of this pandemic and how National Economic Reform’s Ten Articles of Confederation provides the necessary progressive reforms that will propel the United States out of the abyss of debt and restore our economy. Restoring our economy so that every American will have the means and the availability of financial and economic security.

The failure of the Democratic party since 2016 has been recruiting a Presidential Candidate who many felt was questionable and more conservative signals that the results of today has not met with the desired results the Democratic party wanted. Then again? By not fully communicating and not educating the public on the merits of a unified progressive platform has left the United States transfixed in our greatest divides since the Civil War. This writers support of Senator Bernie Sanders is well documented. Since 2015 he has laid the groundwork for progressive reforms. He also has the foundations on which these reforms can deliver the goods as they say. But, what did the DNC do, they purposely went out of their way to engineer a candidate who was more in tune with the status-quo of the DNC. They failed to communicate to the public in educating all of us on the ways our lives would be better served with a progressive agenda that was the benchmark of Senators Sanders Presidential campaign and his Our Revolution movement. And this is way there is still really no progress in creating a less toxic environment in Washington and around the country.

New Eco Fashion

Eco-fashion is about more than your look; it’s about how your look came to be. Designers who choose to integrate planetary consciousness into their clothing collections ask important questions: What kind of fiber was used to make that T-shirt? What type of dye was used to color that skirt? How did those pants get to this store? But though more and more designers- both established and new-are designing clothing with an environmental eye, greening your closet on a budget is not as simple as taking a trip to the mall. Try tossing around green lingo like “ingeo,” “soy,” “bamboo,” “cocona,” or “organic cotton” in your local clothing store and check out the looks you get.But it is possible to fill your closet with affordable, stylish clothing that was made responsibly. You simply have to know where to look. As with conventional fashion, environmentally minded clothing created by the world’s top designers carries some of the world’s top prices. So to keep his or her wardrobe up to date, the fashion forward, budget-conscious Lazy Environmentalist must rely upon a knack for uncovering deals and a willingness to embrace new designers, business practices, and retailers. Here’s some advice for choosing the right looks for you and the planet.KNOW THE MATERIALS Green fashion begins with eco-conscious fabrics, so it’s important to know your materials. Currently there is a (growing) list of materials that are considered healthful and more sustainable for humans and the planet. Organic cotton is the most prevalent- and accessible-of the bunch, accounting for about 70 percent of all eco-fashion sales. Unlike its conventional counterpart, organic cotton is grown without the use of toxic pesticides and insecticides -many of which are considered carcinogenic. Globally, 25 percent of all insecticides and 10 percent of all pesticides are sprayed on conventional cotton, so going organic not only removes the toxins from your T-shirts, underwear, and socks (and anything else made of cotton) but also eliminates a lot of poison from the environment.Fabrics made from other naturally grown crops like soy, corn (called “ingeo”), and bamboo are also considered earthfriendly because they grow and replenish rapidly. And many athletic garments include fabrics derived from coconut shells, which help moisture evaporate, absorb odor, enhance cooling, and provide UV protection. This wonder coconut fiber is called cocona, and it’s currently being used by brands like Cannondale, Marmot, New Balance, and Champion.On the other hand, synthetic fibers like nylon, spandex, and polyester are usually derived from oil, a finite resource that is presently at risk of being depleted and is also one of the main culprits of pollution and greenhouse gas emissions. But materials don’t have to be grown to be earth friendly. Used plastic soda bottles made of PET (Polyethylene Terephthalate) can be recycled and transformed into polyester products such as strappy dresses, comfy T-shirts, or cozy fleece pullovers. Recycling materials for clothing (or anything else for that matter) is an environmental win because it reduces our dependence on virgin natural resources, reduces the amount of energy necessary to convert those natural resources into new products, and helps keep waste out of landfills. Less waste in landfills equals less methane released into the atmosphere (methane is a greenhouse gas that’s 20 times more harmful than carbon dioxide and is produced as garbage decomposes). Designers and fashion labels that utilize greener fibers are quite literally a breath of fresh air.EMBRACE NEW FASHION LABELS Those of us determined to green our jeans will find that most ecoaware denim is priced at or above $150 a pair. But there are exceptions. Good Society delivers high-style, fair-trade certified organic cotton jeans for about $100. Not only is the styling clean and sharp, but every pair purchased also helps provide fair wages for the workers who produce them in India. When we think about “going green,” we typically focus on reducing our environmental impact. But fair-trade certification also ensures that the people making the products we use are not exploited in the process. This helps to create a web of positive change-a good society, if you will. And for Aiden Dingh, Good Society’s co-founder, it’s not enough to sell clothing that respects both the people who make it and the environment we live in, it’s also essential to make those items affordable. While Sling and Stones, Dingh’s original organic cotton denim line, carries designer prices, Good Society makes eco-chic clothing accessible to a broader audience. You can find the collection at big national retailers like Urban Outfitters and at smaller boutiques across the country. Good Society keeps the good going by giving 10 percent of its profits to environmental causes.As eco-aware designers are busy experimenting with new materials and inventive manufacturing techniques, some are also altering the traditional business model. Nvohk, a surf-inspired, eco-clothing company believes that business as usual is business as boring. Based on a model called “crowd- unding,” nvohk customers- or “members,” as the company calls them-contribute $50 and are able to vote on every major business decision like company logo design, clothing design, and even advertising. Once 60 percent of the members agree on a course of action, the management team implements the decision.Members receive a 25 percent discount on all products and collectively share in 35 percent of all net profits via reward points that can be redeemed for nvohk clothing (the company’s corporate structure prohibits the distribution of cash to its members). The model is designed to accommodate 40,000 members, but the business plan went into effect in June 2008 when 3,000 members had registered via the company’s website, Projectnvohk.com. Nvohk is market-based supply-and-demand economics set at mach speed: cutting out the middlemen and channeling customer preferences (demand) directly into manufacturing decisions (supply). Like any new concept, nvohk will undoubtedly attract a fair share of detractors, but several thousand people are already jumping at the chance to be part of a company that feeds the green economy by utilizing sustainable materials like organic cotton while donating 10 percent of net profits to environmental organizations.