Chapter 19
Investing in ETFs
Another great way for investing in the market is with Exchange Traded Funds (ETFs). These are essentially baskets of stocks that trade like an individual stock.
ETFs were first introduced back in 1993 with the Standard & Poor’s Deposit Receipts ETF, ticker symbol SPDR. The “Spider” (as it’s often called because of how it’s spelled) was designed to track the S&P 500, while offering the convenience and liquidity of a stock.
Since then, the number of ETFs and the kinds of ETFs available has grown tremendously as their popularity exploded. You too can include ETFs in your trading. And you can use a stock screener to find the best opportunities at the right time.
ETFs for Any Market and Any Direction
ETFs can be used for virtually any market and in any direction. There are now ETFs on the Dow Jones, newer ones of the S&P 500, the Nasdaq, and the different Russell Indexes.
In addition, there are ETFs on many different sectors and industries such as:
Financials
Oil and Gas
Basic Materials
Consumer Goods
Real Estate
Healthcare
Technology
Telecommunications
Utilities
And so many more.
There are even ETFs on currencies and treasuries, gold and silver, and international market ETFs representing the indexes in China and Japan, to name a few.
But the innovation of the ETF business doesn’t stop there. Investors can actually buy ETFs that will make money (rise in price) as the market or a specific industry falls.
As we discussed in the options section, buying put ...
