Why You Should Try Everything Once… Even When Investing

Original post

“I have no boundaries. I am totally flexible. I am open to everything, and I pursue everything. I have no more compunction about speculating in Singapore dollars or shorting Malaysian palm oil than I do about buying General Motors.”

– Jim Rogers

Global investing pioneer Jim Rogers is the ultimate big-picture investor.

Ever since his days as George Soros’ first investment partner in the late 1960s, Rogers has spent his life tracking financial markets across the globe.

I don’t always agree with Rogers’ strong opinions.

Nevertheless, I have always admired – and emulated – Rogers’ openness to investing in anything and everything he can get his hands on.

After all, why limit yourself to buying and holding only U.S. stocks?

Like Rogers, I believe it’s a big investment world out there.

And like him, I am totally flexible.

I don’t think it makes any difference whether I make money by trading a currency or by shorting an obscure commodity like palm oil.

I’m willing to go wherever the next opportunity takes me…

ETFs Make Flexible Investing Easy

This flexible investment philosophy explains why I find exchange-traded funds (ETFs) so compelling.

Using ETFs, you can invest in everything from stocks to bonds to commodities to currencies across the world.

You can invest long or short and even place leveraged bets on whether you expect the market to go up or down.

When Rogers shorted the Japanese stock market bubble in the late 1980s, he likely had to set up a local Japanese brokerage account.

Today, Rogers could short the Japanese stock market by buying an ETF at the click of a mouse.

Three ETFs for Today’s Challenging Markets

Over the past decade, the simple strategy of buying and holding U.S. stocks worked like a charm. The average investor looked like a stock market genius. All you had to do was buy a stock and watch it go up.

That all changed in 2018.

The January and October market pullbacks were a wake-up call for investors in U.S. stocks.

The lesson is now painfully clear: If you want to make money, you must adopt a more flexible approach to the markets.

Each day, I monitor hundreds of ETFs that offer just that kind of flexibility.

Below are three examples of the remarkably diverse types of strategies you can implement using ETFs.

1. Direxion Daily MSCI Brazil Bull 3X ETF

Some ETFs offer you the chance to swing for the fences – and generate option-style returns if you get your timing right.

The Direxion Daily MSCI Brazil Bull 3X ETF (NYSE: BRZU) is just one of those ETFs.

Specifically, it’s a triple-leveraged bet on the daily performance of the MSCI Brazil 25/50 Index.

It is also my entry into The Wall Street Journal‘s stock-picking contest.

In betting on Brazil, I was looking for a single thing: a psychological catalyst that could move the market over the short term.

And Brazil had that catalyst in presidential candidate Jair Bolsonaro – a colorful, far-right former army captain dubbed the “Trump of the Tropics.”

Promising to restore “traditional values” to Brazil, Bolsonaro mastered social media to communicate directly with an electorate disillusioned with a corrupt political culture.

I recommended the Brazil Bull 3X ETF based solely on my expectation that the Brazilian stock market would soar on the prospects of a Bolsonaro presidency.

Since August 29, the day I entered the contest, the Brazil Bull 3X ETF has risen 65.5%. Big gains like this make its annual 1.14% fee much more tolerable.

2. Invesco CurrencyShares British Pound Sterling Trust

Jim Rogers’ former investment partner George Soros famously made more than $1 billion speculating against the British pound in 1992. It cemented his reputation as the greatest speculator in the world.

Today, there is an ETF that allows you to play the same global currency game as Soros.

And you can do it straight through your stock brokerage account.

The Invesco CurrencyShares British Pound Sterling Trust (NYSE: FXB) tracks the value of the British pound versus the U.S. dollar.

The fate of the pound is closely linked to Brexit – the United Kingdom’s impending exit from the European Union on March 29, 2019.

Following last June’s Brexit vote, the pound plummeted.

From a low of $1.23 against the U.S dollar, the pound has rebounded slightly to its current level of around $1.27.

That’s far from its $1.48 pre-Brexit level.

One thing is certain.

The period between now and March 29 will be exceptionally volatile for the pound.

But once the U.K. resolves the terms of its Brexit transition deal with the EU, the British currency should continue its bull run.

3. Proshares Short Dow30

Some ETFs give you the option to bet against the market – and make money when the market goes down.

Say you are skeptical of the year-end Santa Claus rally and fully expect the U.S. stock market to fall off a cliff in 2019.

The ProShares Short Dow30 (NYSE: DOG) allows you to profit from just this kind of doomsday scenario.

This ETF tracks an inverse index of the daily performance of the Dow Jones Industrial Average.

Put simply, if the Dow drops 2% tomorrow, this ETF should rise about 2% simultaneously.

More on ETFs Coming Soon

Each of these ETFs opens up a whole new universe of investing possibilities…

And each goes far beyond just “buy and hold” or “grin and bear it.”

I’ll be sharing many more of my ETF investment ideas in my new trading service, Oxford Wealth Accelerator.

Stay tuned for more information about this new service.

Good investing,

Nicholas

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