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How to Make Money in ETFs

September 12, 2008

By Jamie Dlugosch, Contributing Editor, Investors Insights

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Jamie Dlugosch

Jamie Dlugosch

Jamie is the editor of Penny Stock Winners. He has over 20 years of experience in financial markets including investment banking, equity analysis and research and money management. In addition to being the Editor of Penny Stock Winners, he is also a Contributing Editor of InvestorPlace.com and founder and editor of The Rational Investor.

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"Have you ever seen a more perplexing market?"

That is a question I hear more often than not. Wall Street is always a riddle, but during the last year we are dealing with a Rubik;s cube that has more questions than answers.

How do you make money in such a difficult stock market?

The old standby broad brush strategies of buying growth or buying value do not work. Owning index mutual funds definitely doesn't work (especially when the markets are down across the board!)

Of course, there is still money to be made in the market, but you need to be a phenomenal stock picker to get it right. While some may have that innate ability to pick winning stocks, most investors don't.

So what is the average investor supposed to do?

Well, Exchange Traded Funds (ETFs) might be the right answer for you. 

With a broad array of long, short, currency, foreign and any combination thereof, there is an ETF out there that could very well make you more money than you are seeing with your individual stocks.

I've experienced this firsthand. Previously, my training required that I stick to finding undervalued stocks to make money in the market. I had little time for mutual funds or any other products that took me away from this core strategy.

I'm a stock picker, plain and simple and have had great success, although I have to say that over the past two years finding great stocks has been a difficult.

Oh sure, I have continued to have great success picking winners, but I felt like I needed to broaden my horizons. So at the beginning of this year, I decided to add ETFs to my investing arsenal.

Why? I wanted to have as many tools available to me to make money in the market, and I thought the narrow focus of available ETFs did just that.

Well, it looks like I made a wise move.

ETFs Provide Emerging Market Exposure

Front and center was my decision to have short exposure in my portfolio by shorting emerging markets, including China. 

I did this by owning…