I don’t know if you experienced any financial hardship in 2008. I sure did. Just two years prior, I had purchased my very first home at age 23. The market I thought would only go up and up crashed. During that time, I learned a very important lesson — markets are cyclical, not linear.
One interesting tidbit I learned from someone was that when downturns happen, you can profit by “shorting” the market or betting against the market. Take a look at this ETF. It functions as the opposite of the US stock market. During the crash on November 21, 2008, it skyrocketed to $581,000 per share. Now, it’s valued at $34.90. If you had owned just two of these shares on November 21, 2008, and sold them, you’d be a millionaire. (Minus taxes, of course, so maybe you would have needed three shares to be a net millionaire.)
How to invest in an EFT
EFTs, or Exchange Traded Funds, work like stocks but they are actually index funds that track stock market indexes. They are more cost-efficient than mutual funds, but you’ll pay a fee each time you want to buy or sell an ETF. That’s why you’ll want to keep your per trade cost as low as possible and take a look at the expense ratio. See more on this here. Also, with a leveraged ETF like the one above, you’ll run into something called volatility drag, so these are not meant to be held for a long period of time.
Investing is always a gamble. No one knows the future. However, we can pay attention to trends and learn from the past. Some who have done this have profited in big ways!