SPDN: An Inexpensive Way To Profit When The S&P 500 Falls

Summary
SPDN is not the largest or oldest way to short the S&P 500, but it’s a solid choice.
This ETF uses a variety of financial instruments to target a return opposite that of the S&P 500 Index.
SPDN’s 0.49% Expense Ratio is nearly half that of the larger, longer-tenured -1x Inverse S&P 500 ETF.
Details aside, the potential continuation of the equity bear market makes single-inverse ETFs an investment segment investor should be familiar with.
We rate SPDN a Strong Buy because we believe the risks of a continued bear market greatly outweigh the possibility of a quick return to a bull market.
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By Rob Isbitts

Summary
The S&P 500 is in a bear market, and we don’t see a quick-fix. Many investors assume the only way to navigate a potentially long-term bear market is to hide in cash, day-trade or “just hang in there” while the bear takes their retirement nest egg.

The Direxion Daily S&P 500® Bear 1X ETF (NYSEARCA:SPDN) is one of a class of single-inverse ETFs that allow investors to profit from down moves in the stock market.

SPDN is an unleveraged, liquid, low-cost way to either try to hedge an equity portfolio, profit from a decline in the S&P 500, or both. We rate it a Strong Buy, given our concern about the intermediate-term outlook for the global equity market.

Strategy
SPDN keeps it simple. If the S&P 500 goes up by X%, it should go down by X%. The opposite is also expected.

Proprietary ETF Grades
Offense/Defense: Defense

Segment: Inverse Equity

Sub-Segment: Inverse S&P 500

Correlation (vs. S&P 500): Very High (inverse)

Expected Volatility (vs. S&P 500): Similar (but opposite)

Holding Analysis
SPDN does not rely on shorting individual stocks in the S&P 500. Instead, the managers typically use a combination of futures, swaps and other derivative instruments to create a portfolio that consistently aims to deliver the opposite of what the S&P 500 does.

Strengths
SPDN is a fairly “no-frills” way to do what many investors probably wished they could do during the first 9 months of 2022 and in past bear markets: find something that goes up when the “market” goes down. After all, bonds are not the answer they used to be, commodities like gold have, shall we say, lost their luster. And moving to cash creates the issue of making two correct timing decisions, when to get in and when to get out. SPDN and its single-inverse ETF brethren offer a liquid tool to use in a variety of ways, depending on what a particular investor wants to achieve.

Weaknesses
The weakness of any inverse ETF is that it does the opposite of what the market does, when the market goes up. So, even in bear markets when the broader market trend is down, sharp bear market rallies (or any rallies for that matter) in the S&P 500 will cause SPDN to drop as much as the market goes up.

Opportunities
While inverse ETFs have a reputation in some circles as nothing more than day-trading vehicles, our own experience with them is, pardon the pun, exactly the opposite! We encourage investors to try to better-understand single inverse ETFs like SPDN. While traders tend to gravitate to leveraged inverse ETFs (which actually are day-trading tools), we believe that in an extended bear market, SPDN and its ilk could be a game-saver for many portfolios.

Threats
SPDN and most other single inverse ETFs are vulnerable to a sustained rise in the price of the index it aims to deliver the inverse of. But that threat of loss in a rising market means that when an investor considers SPDN, they should also have a game plan for how and when they will deploy this unique portfolio weapon.

Proprietary Technical Ratings
Short-Term Rating (next 3 months): Strong Buy

Long-Term Rating (next 12 months): Buy

Conclusions
ETF Quality Opinion
SPDN does what it aims to do, and has done so for over 6 years now. For a while, it was largely-ignored, given the existence of a similar ETF that has been around much longer. But the more tenured SPDN has become, the more attractive it looks as an alternative.

ETF Investment Opinion

SPDN is rated Strong Buy because the S&P 500 continues to look as vulnerable to further decline. And, while the market bottomed in mid-June, rallied, then waffled since that time, our proprietary macro market indicators all point to much greater risk of a major decline from this level than a fast return to bull market glory. Thus, SPDN is at best a way to exploit and attack the bear, and at worst a hedge on an otherwise equity-laden portfolio.

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#EANF#

Can Nutrition Bars Really Be Nutritional?

My patients frequently ask me if using nutrition bars would be of any benefit to their overall health or weight loss plan. I admit, even I grab one of these bars every now and then for a quick snack, or even lunch on a really busy day sometimes. In fact, I would much rather have my patients substitute a good nutrition bar for lunch than grab a high-saturated-fat burger and fries.These bars are convenient, they don’t require refrigeration, and, if you read labels before buying, they really can help you get some good nutrition in a hurry. Here’s what I tell my patients about the pros and cons of the “nutrition on the run” that these bars offer.Are All Nutrition Bars Alike?Seems every time I go to the health food store, there’s a new nutrition bar promising to be better tasting, or more vitamin/protein-packed than all the other bars! However, what tastes good to me may not to you, so, different flavors aside, let me explain what ingredients should be in a good nutrition bar.•Protein:For meal replacement, a good bar should have at least 15 grams of protein, preferably from whey or even casein protein and not soy, gelatin or collagen protein. Many bars, however, contain soy protein isolate, or a blend of whey, casein, and soy. Soy products can interfere with thyroid hormones as well as imbalance male and female hormones, as it adds plant estrogen, or phytoestrogens, to your body.•Fat: Should be fairly low in fat, not more than 3 grams saturated fat and 0 trans fat, 10 grams total fat. Steer clear of bars that contain cholesterol-boosting oils like palm kernel oil. Bars with polyunsaturated vegetable oils like olive, safflower, or coconut oil are best.•Carbohydrate: For meal replacement, there should be a balanced fat/carbohydrate/protein ratio, in a 40/30/30 distribution, i.e., 30% protein, 30% fat, 40% carbohydrate. If you want added protein only, then the carb and fat level can be lower than this distribution. Some bars can contain a whopping amount of sugar, however! Limit sugar to 10-15 grams.•Sugar Alcohols: Many low carb nutrition bars contain sugar alcohols. These help sweeten the bar without adding carbohydrates. When figuring the carbohydrate, or glycemic load, they should be subtracted from the overall carbohydrate content. For example, if the bar contains 25 grams of carbohydrate and also 20 grams of sugar alcohols, then the effective carbohydrate count would only be 5. Some people get digestive upsets from sugar alcohols which can be a drawback to bars that contain it.•Vitamins: A good bar has at least 1/3 of the minimum daily requirements for vitamins, usually in the 30% range for crucial vitamins like C, E, D, A. This is especially important if you are using a nutrition bar as a meal replacement.•Minerals: Many good bars also contain 1/3 the minimum daily requirement of necessary minerals like potassium, magnesium, calcium, zinc. Again, should be in the 30% range for meal replacement use.•Fiber: Many nutrition bars contain very little fiber, but several brands have between 4-6 grams. Or, at least have a piece of fruit, or a salad, with it to make up for fiber deficiencies.•Calories: If you’re using it as a meal replacement for a quick lunch, your nutrition bar should have between 200-300 calories in it. Otherwise you’ll be at the snack machine in an hour!Are There Any Cons to Nutrition Bars?We’ve talked about what I recommend a good bar should contain. Now, are there any real disadvantages, or cons, to using nutrition bars? As I tell my patients, I think that answer depends on how you use them. With that in mind, here are some possible disadvantages to using nutrition bars that you might consider when deciding to use them everyday or just occasionally:•Cost: Most good nutrition bars can cost anywhere from $2 to $3 a piece. This can get expensive if you use them everyday. However, if you use them as a meal replacement for one meal a day, that’s still less than the cheapest burger place for lunch, a lot less fat and salt, controlled calorie amount, and more vitamins and minerals.•Excessive Nutrition: If you’re using a nutrition bar for just a snack here and there, and not as meal replacement, look for one that has less than the 30% minimum daily requirement of vitamins and minerals to avoid over-intake of nutrients. This is especially true if you are taking a good vitamin/mineral supplement already everyday and eating well at your other meals. Too much Vitamin A can pose liver problems. Too much Vitamin E can result in excessive bleeding should you cut yourself.•May Contain Herbals: Steer clear of nutrition bars that contain “energy boosting” herbs such as ephedra, bitter orange, or even caffeine from green or black tea extracts which can affect some people’s heart rate or blood pressure adversely.•Taste: The taste of these bars can vary widely from brand to brand and price range. Some are in the “acquired” taste category and can be rather dry. Then there are others that really taste great. You really have to shop around and try a lot of different ones to find one you like and could eat on a regular basis.If you take medications, it’s always a good idea to ask your doctor about adding anything with vitamins/minerals in it that may interfere with absorption of your medications. Nutrition bars should not take the place of a balanced diet of whole foods, but they can provide a satisfying solution to a chocolaty-sweets craving, or provide a quick and nutritional meal on the run!