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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.
Put a gear stick into R position, (Reverse).
Birdlkportfolio

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.

Until a few days ago, if you had asked me to tell you about Sierra Leone, I would have had to think long and hard to tell you much about this West African country. I could probably have explained roughly where the country is located. I may have mentioned something about the slave trade being connected to Sierra Leone. I could certainly have told you that they had experienced a brutal civil war. I might even have admitted that I wasn’t entirely sure whether the war was 100% over. And that’s about it.Slavery and war. A pretty negative view of what is in fact an exceptionally positive country. Today, I see Sierra Leone from an entirely different perspective.It is difficult to ignore Sierra Leone’s history and focus purely on the present. Once a fertile area inhabited by dozens of tribes, it was settled by the Portuguese in the 1400′s who built a fort as a trading post for gold, spices, ivory and slaves. A British protectorate in later years, Sierra Leone had the dubious honour of becoming home to more than 40,000 freed slaves who gave Freetown its name. As a protectorate, Sierra Leone was exploited for its mineral and diamond wealth in the 1900′s and Sierra Leonean’s fought against the Germans in Cameroon in the First World War, and alongside the British in the Second World War. In 1961, Sierra Leone achieved independence from Britain and governed itself peacefully for 30 years. The peace was not to last and was followed by a decade of brutal civil war that destroyed the economy, brutalised the people and left a country that is rich in resources as one of the poorest in the world.The conflict was officially declared over in January 2002, and President Kabbah reelected in May 2002. Since then, the people of Sierra Leone have been pulling together to repair, renew and regenerate.Whilst doing research for a new website looking at travel and tourism in Sierra Leone, I came into contact with Sierra Leoneans from all manner of backgrounds living in both Sierra Leone and elsewhere. Their passion for the country was infectious: they clearly wanted to get the message across that Sierra Leone has far more to offer than a sad recent history and that reconstruction is moving ahead at a rapid pace. And indeed, proof of reconstruction is everywhere – new roads are being built, mines are being re-opened, dam projects started before the war are once again underway, markets are once again thriving and humming with life. There is also a great deal of confidence in Sierra Leone’s potential as a tourist destination: a Chinese company has recently invested a reputed US$270 million in the hotel infrastructure; enterprising companies like Kevin McPhillips Travel (based in the UK, USA and the Netherlands) offer exclusive twice weekly flights to Sierra Leone; African Tour specialists are researching viable package holidays in the region. The exciting thing about investment in Sierra Leone is that more is set to follow!They have a right to be confident. The beaches along Sierra Leone’s golden peninsula are said to be one of the world’s best kept secrets. Secluded, clean and stretching for miles on end, beach tourism is one of the top items on the government’s tourism promotion agenda. Beaches with very British names like Kent, Lumley, Sussex and York mix with more African names like Bureh Town, Tokey and Mammah beach, andAlthough many of the forests and much of the wildlife has been disturbed and in some cases, destroyed, by the war, eco-tourism is an important focus of Sierra Leoneans and natural treasures like Outamba-Kilimi National Park, populated by game animals such as elephants, chimpanzees and pigmy hippos, and Mount Bintimani, the highest point in West Africa, are just two of the worthwhile wildlife attractions on offer. Tacugama Chimpanzee Sanctuary rescues orphaned and captured chimps and has been described as one of the most successful Sierra Leonean wildlife endeavours, whilst Tiwai Island is home to over 3000 chimps as well as other game.Lakes, rivers and dams are perfect for picnics and relaxing. The marshlands hide a myriad of colourful birds – indeed, the bird life has been less affected by the war than the animals, and everywhere you go, the air is filled with birdsong. Sierra Leone is a bird-watchers dream! Tiwai Island for one boasts over 135 different bird species!For culture vultures and those with historical interests, the remnants of the slave trade make interesting and though-provoking expeditions. Bunce Island, a slave trading fortress, is a brief boat trip up the river; Freetown is itself a monument to freed slaves and its Cotton Tree, which stands in the heart of what is thought to be an old slave market, is now an impressive national symbol. Graves, monuments and forts are all that remain of British and Portuguese power in Sierra Leone: each has a tale to tell. There are over 16 different ethnic groups in the country, including the Krio, descendents of freed slaves who speak an English-based Creole called Krio, and visiting villages and chatting to people in markets and in the streets is rewarding for all parties!Freetown is probably the most developed of the cities, offering a level of safety that is difficult to match even in Western countries. Hotels, restaurants and nightspots are sprouting like mushrooms, and eating out in Sierra Leone promises a range of traditional and international treats, and seafood that is beyond belief!One has to wonder what attraction will tip the scales in making Sierra Leone the popular destination that it once was before the civil war. Based on my experiences with Sierra Leoneans in recent weeks, I feel that it will be the people who make the difference. Without exception, every Sierra Leonean that I have met or worked with has been proud of their country, proud of its progress and excited about the future. They are unfailingly welcoming, greeting aid-workers and travellers alike with smiles that you can only find in Africa, with an optimism – no, positivity – that other countries would do well to emulate.For travellers in search of a “diamond in the rough”, Sierra Leone offers a holiday like no other – my only advice to you is to visit sooner rather than later, to avoid what is sure to be a stampede once holiday-makes and tour operators latch on to this gem of a destination.