How to Use Inverse ETFs to Hedge Your Portfolio

Say you built your portfolio with care. You put in the time and energy to learn the basics and then proceeded to discuss your investment objectives with your spouse, decide on a good asset allocation, and consult with advisors to build a good diversified portfolio of stocks, bonds, funds and more. You left no stone unturned and did everything you could to make sure your financial future is secure. And then it turns out – your timing was wrong. You took positions in solid companies but are now getting crushed in the market. What do you do? Should you sell everything and get out? That would be a classic “greed buy and fear sell.” Or do you buy more of what you own at lower prices, in order to bring down your average cost? Or maybe, if you have the experience, start short selling so that you gain from the downtrend?