This investment activity is mankind's second most serious game, next to war. No second chances. You snooze, you lose. Bought when you shoulda sold? Too bad. Do it right next time, or soon there won't be any next time - for you.
Every trade has an "other side." If you lose, he/she/they win. Can "they" always be on the winning side? Maybe not always, but one group usually is.
They are the market-making community. Their business puts them constantly at risk, so being forced to be survivors they know not to make stupid bets. The ones where current, full, perspective puts the odds against them, instead of against the "other side" - you.
They have spent decades, over a century now, in building their intelligence-gathering systems, worldwide, with well-trained people in key positions, supported by the best communication equipment, tied into the action centrals - their volume Block Trade Desk and their Proprietary Trades Desk.
The guys working those desks have short careers. You may be thinking of a very few who made mistakes; the size of potential losses does get them shed quickly. But the ones we are talking about are the retirees who in just a few years of multimillion-dollar pay can easily live lives of complete comfort. And often do.
They know how to put the odds on their side by careful choice of the fights they engage in. The activity is called hedging. It is the art of taking counter-balancing positions in securities (often derivatives) that offset potential losses with equal or greater gains of their own. Their connections, information flows, financial resources and years of intimate experience with specific subjects provide a sharp focus on the task at hand.
No romantic notions about capitalistic democracy or the social good provided by business or any other concept - it's all about making money on this trade. And on the next one. And on the thousand or more behind it today. And they tend to know the odds of what will do that best, time after time.
They aren't talking, unless you are in the firm's training program, with far more of a future to lose than could be made on front-running any trade you might learn about. But anyone on the street with resources could easily, or even accidentally, get in the way and screw up the odds. So whatever happens on the Prop Desk stays on the Prop Desk.
There is a way, though, to know what is currently happening on those crucial desks, and from it, to learn what is the thinking and price-change expectations of the present, for the near future. It turns out that those changes are large enough, and do happen quickly enough, and with reasonable consistency, to make their compounding, even factoring in a few losses, a rate of return that is several times as large as conventional buy and hold and hope (and forget) ever produces.
The way to find out what they are thinking is to see what they are doing in the hedging markets. See what they will pay for protection from the risks they must take, and how they structure their insurances. It's a very complicated game, and takes special insight.
This is one of those times, for a quick review of which ETFs they currently think give the best Win-Odds for wealth-building gains, near-term. This table gives some particulars, ranked by the Reward-to-Risk ratio:
These are screened out of over 200 actively-traded ETFs that have at least 3-year to 5-year histories, ones that have 25 or more prior days in that time where they previously traded at upside-to-downside price-change forecasts like those seen now. Moreover, they typically reached upside forecast sell targets in at least 7 out of every 8 cases, and none had worse price drawdowns below cost after the fact than the upsides then being forecast beforehand. For more insight into where this information comes from read this.
Just for comparison with their averages, we include what is being expected for the SPDR S&P 500 (SPY) as a sort-of-passive alternative.
We encourage you to do your own Due Diligence on the ETFs that may be appealing in terms of their trade-offs between expected price gains and past worst-drawdown experiences. You won't get ahead of the market-makers, but you may well be able to benefit from what they are thinking. Many have.