Global stock markets have been in a multi year bull run, this however, is starting to show signs of abating and the chance of a crash is looking more likely than it was 6 months ago.
We present a number of strategies for those that wish to err on the side of caution and get themselves some protection.
Move into cash
Cash is king. In times of volatility, sometimes the best option is to liquidate the portfolio and await cheaper prices and higher stability.
Exchange Traded Funds
There are numerous Exchange Trade Funds that offer investors the opportunity to profit from a plunge in equity prices. These can be focussed on whole indexes or a selected basket of stocks.
Deutsche Bank offer DB X-Trackers FTSE 100 Short Daily ICITS ETF (LONXUKS) which is designed to reflect the opposite movements of the FTSE 100 on a daily basis. This means that the share price of this ETF will rise if the FTSE 100 falls.
Some ETFs enable investors to gain downside ‘short’ exposure on a specific sector. ProShares Short Oil & Gas (NYSE:DDG) tracks the Dow Jones U.S. Oil & Gas index which contains around 95 companies such Exxon Mobil, Chevron and ConocoPhillips. If this basket of 95 shares fall the price of ProShares Short Oil & Gas will rise.