If like me you have an IRA, 401K or SEP account you can not traditionally short stocks in these accounts. In my 401K plan there is no way to protect my investment if the market turns down unless I sell the shares and go into cash as my defensive play. If you have a self-directed IRA you can invest in not only stocks, mutual funds, etfs but also real estate. But not all self-directed IRAs allow you to short stocks - but now there are new securities to trade with to short the market.

A few fund families like ProShares and iShares are offering inverse ETF’s that allow you make money while the underlining index goes down. In most cases the relationship is 1:1 but some offer 1:2 ratios where the relationship is twice the inverse. These are more risky but are very powerful if you manage your risks.

The three most common long ETFs are:

• Diamonds [[DIA]] which track the Dow Jones 30
• Q’s [[QQQQ]] the NASDAQ-100
• Spiders [[SPY]] the S&P 500

But what if the market turns down then we can buy the 1:1 inverse of these ETFs which are

• Short Dow 30 [[DOG]]
• Short QQQQ [[PSQ]]
• Short S&P 500 [[SH]]

But if you are more aggressive and want more leverage action then try the Ultra shorts which are 200% the inverse of the index movement.

• UltraShort Dow 30 [[DXD]]
• UltraShort QQQQ [[QID]]
• UltraShort S&P 500 [[SDS]]

You should take are look at these ETF’s in your portfolio to hedge the market when we turn down but as always do your research and protect yourself with good money management protection by using stops.