VOO - ETF Arbitrage: A Timely Strategy For S&P 500 Lovers
2024-03-05 12:32:08 ET
Summary
- Investors should not take the stock market's long-term safety for granted and should always account for potential risks.
- Using pairs or sets of ETFs, including leveraged ETFs, can provide a differentiated way to navigate modern markets and manage risk.
- ETF Arbitrage is an approach that involves establishing a core long position and complementing it with positions in inverse ETFs, rotating and allocating based on market signals.
One of the biggest dangers I see for investors today is to simply take things at face value. They assume the stock market will always be a safe place in the "long run" which brings to mind the famous phrase from 20th century economist John Maynard Keynes: In the long run, we're all dead. (If that's a bit disturbing, just sing the Eagles hit, "The Long Run" to yourself).
Another danger is not about what might happen, since predicting the future path of the stock market, while it gets headlines, should truly be a minor factor in an investor's process. Note that I said "predicting" the market. What I do think is extremely valuable (to me) over the decades managing money professionally is a simple, yet course-changing concept:...
ETF Arbitrage: A Timely Strategy For S&P 500 Lovers