Simple question:
If you can’t buy Puts with Wealthsimple, what can you buy in case the market goes down?
I have made quite a lot in high flying tech stocks and wondering how to protect it.
Also, is there no way for us to buy bonds?
Posted Feb 26, 2021, 2:11 PM UTC · edited
Inverse ETFs are an option.
Edit: and yes, as u/_binder said, look into how they work. I quickly realized that it wasn't worth the trouble with the small amounts I was playing with.
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Definitely look up how inverse etf works.... it's only good if you wanna get in and get out in few days.
Why? To answer my own question, I think it's because management fees are high, so usually loose money on the long term. But can it still make sense, like holding DDG until peak oil?
I think there's too much decay for a long term hold for daily inverse etfs: https://www.reddit.com/r/CanadianInvestor/comments/g37f6u/wealthsimple_trading_inverse_etfs_hix_and_hiu/fnpm8bv
Honestly, I'm too new to this to give good advice there. Not sure if there are a whole lot of Canadian ones available. I tried HIX myself (bad timing, dumped it right away), and Horizon also has HIU.
Also just saw HSD mentioned on r/CanadianInvestor .
HSD is a daily inverse etf, it decays long term. Look at a long term chart.
I believe the other two I mentioned are as well? Was just really mentioning the existence of inverse ETFs. Didn't see any mention of a long-term hold.
Why were the comments removed here? (just curious)
No idea personally, it was a reply asking for recommendations for specific ETFs.
"This subreddit is not for financial advice" maybe? But I understand this thread is also about finding out what is available on WS. So even though there's some financial advice coming with it, the topic is all WS-specific and thus there's not really a better place.
Blue chips. They go down but not wildly and they recover rather than free fall. You should have one portion reliable blue chips and the other portion fun tech and growth an speculative and even penny. I mean I feel like it’s the only thing you can do to actually protect your money.
This is basically based on age the older you are the more stability you should own etc.
I’ve also heard that 100 minus your age is what stocks vs bonds should be in your portfolio.
So if your 30 then that’s the percent of your portfolio that should be bonds vs 70 percent stocks.
If your 50 then it should be half stocks and half bonds.
I am also curious if bonds are or will be a thing you can ever buy on Wealthsimple.
*math is hard lol
For context i’m soon to be turning 25.
I have about 75% of my portfolio in tech/growth, 25% in blue chip.
Not that i’m necessarily looking to buy bonds now, I’m 25 and 10 year T bills are barely cresting 1.5% — but we can’t even buy bonds with Wealthsimple, can we?
Also curious I don’t know 🤷♀️ maybe someone will answer lol 😆
If you search for "bond" in WS a few things pop up. I think they are Bond ETFs. But none of them seem to ever make profit and are stable over the last 5 years. I don't see the point...!?
There are actually quite a few that in the long term have been growing over the years and are dipping drastically right now. I don't understand what they are exactly, but apparently it's a boomer thing, so can't be too risky. I YOLO'd a good amount into it
Googled it but didn’t read it yet
https://www.wealthsimple.com/en-ca/learn/investing-in-bonds#where_to_buy_bonds
It seems like from the article they do have bonds
Plenty of bond ETFs but yeah i feel you there @ the last sentence
There are Inverse ETFs. I just looked into them this morning as part of my Sunday strategy session (sipping coffee and reading Reddit and then jumping off to stock analysis sites Lol).
They work when the market is bearish, declining and are only suited for a day trade in how they're structured.
It would mean setting a Limit Buy the previous night, hopefully get your price point, monitor all day and sell at your Limit Sell that day.
Very much a inout, inout, who's your mother, dine and dash, super on the ball method - especially with WS's limitations.
I'm sure some make them work but the couple of Canadian Inverse ETFs I looked at were negative growth and for the amount of risk and stress, Ima day nah dawg. Good luck!
…say…
Leveraged/Short ETFs. Otherwise, open a margins account with an institution which offers shorts/puts.
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If you are 25 you shouldn't really look at your stocks untill you are 30. Just keep buying vgro. Now that that is out of the way, you could buy splv which should drop less if there is a market correction. Alternatively, to really hedge, buy a 1 year out put on the SP that is way out of the money. But WS DOESN'T let you buy puts.
Cash is the simplest downside hedge out there.
Look up BetaPro on WST. They have inverse ETFs on the TSX so no conversion fees. Determine if these are right for you and your risk tolerance. At the end of the day, cash is a position that will let you sleep soundly at night. If you are confident in the companies you own I would say holding them through a market dip is best and then holding a higher % of cash in your portfolio than you may have over the past year to buy dips as they come.
HUV, it tracks VIX and is CDN hedged.
I buy DOG to hedge. This is not financial advice.
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Bonds.
inverse bond etfs
inverse bond etfs. when interest rates rise bonds get hammered. Interest rates are at a point now where there is no where to go but up. Betting against bonds over the next 2-3 years seems like a no brainer to me. Pro shares and Derexion offer multiples 2x & 3x. The stock market overall in my opinion is going to tank. Invest in inverse anything except commodities and materials and you should be good to go. Anyone who thinks this is a temporary setback for technology is in for a surprise. Everything is overvalued at this point. 2021 is not going to be good for the market. Youtube Harry Dent, he's got it right this time.......
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If you’re in for the long haul, downturns shouldn’t be something to worry about all that much. A decently diversified portfolio will recover eventually and in the mean time everything is on sale :)
If you don’t have the ability to wait out downturns, you may have a much lower risk tolerance then your portfolio provides. (Or your just not holding for the long term and nothing I said applies)
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