Both US and Australian stock markets sunk in value today, but not everyone is torn up about their investments shrinking.
Australian shares opened almost 2 per cent down on Thursday morning after US shares were sold off in droves overnight, stoking fears of a looming recession.
But one investor showed even in tough times, there are people making money:
The screenshot from the Australian investor's trading app shows an investment that shot up 9.06 per cent on a day when most stocks bled red.
The investment is "Proshares TR/Ultrapro Short QQQ", listed on the NASDAQ with code SQQQ.
The share is an 'inverse exchange traded fund', which is an investment fund that goes up in value when the market sinks.
A standard ETF's share prices go up when the market it is tracking goes up, and vice versa.
Stake operations manager Sarhang Shafiq told Yahoo Finance last week that investing on markets going down is the same as you've seen in the movies.
"Remember the Hollywood blockbuster ‘The Big Short’ where a bunch of investors made massive gains on the housing market crash?" he said.
"That's what it’s all about – taking the 'short' or 'other' side of the market."
Traditionally short investing was only the domain of sophisticated investors, but the rise of inverse ETFs mean ordinary punters can just buy shares to be exposed to the same effect.
The Australian Securities Exchange only has a limited number of these products available – three, according to Shafiq, compared to 150 in the US market.
"It’s still not for everyone as these securities have some complexity to them, but they are used by regular investors to trade in the opposite direction."
The SQQQ specifically is a leveraged ETF, meaning any losses and gains are multiplied by three. The NASDAQ was down 3.02 per cent overnight, meaning the lucky investor above raked in a 9.06 per cent gain.
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