But I am not an advocate of diversifying just for the sake of diversifying. For example, I am against fund of fund mutual funds or ETFs that invest in thousands of different stocks.
For example, if you design your portfolio to replicate the S&P 500, you may think that having 500 stocks in your portfolio is providing you with diversification. In reality, your portfolio would be 100% large caps, 100% equities, 100% long, and 100% American, and thus very much concentrated.
A more logical approach would be to consider shorting stocks, going into commodities, currencies, or bonds. One commodity that tends to move independently from the stock market is silver. Here are 3 ways to play silver if one were so inclined:
Here is a closed end fund called the Central Fund of Canada:
This fund trades like an ETF, and has a ticker symbol, CEF, just like a stock would. The fund's unerlying assests consist of approximately 57% gold, 40% silver, and 3% cash.
The next ETF is more popular, and follows silver directly:
Each unit of this fund is meant to represent 1 troy ounce of silver, so it does not suffer from compound interest issues found in ultra ETFs. Speaking of Ultra ETFs, there is one for silver as well:
Since silver by itself can be very volatile, this fund should be traded with caution, if at all.
I placed a buy stop on SLV this afternoon, which was hit. In my opinion, the entire precious metals sector looks favourable right now, but time will tell.
