Many of us have seen our shares and ISAS contributes to strong gains during the past six months. The markets have generally rose up, and for those who have various bags, this progress is likely to be reflected in health account balances.

With this in mind, some may surprise – although perhaps not everything – that there are investors who put in place activity for weakness.

One of the prominent examples comes from the political world. Congress member Tim Moore, who is sitting in the American House of Representatives committees on financial and budget services, performs large purchases Overly (NYSEMKT: TZA), ETF (Traded Box for Exchange) three times. Russell 2000 index The smaller American companies.

In fact, when Russell 2000 1 % decrease, Tza rises about 3 %. Moore's deals stand out that everyone is not convinced that the gathering will continue, especially with the names of a small cup that is more vulnerable to weak and volatile. His deals were made in late August and reached up to $ 215,000.

A little more on Tza

In essence, Tza is a way to profit when smaller American companies stumble. The Russian 2000 index is often more sensitive to economic pressure than S & P 500Looking at the tilt of heaviness towards companies that are concentrated locally with thinner margins. By providing three times the opposite daily return, TZA can appeal to investors who believe that the stronger conditions are waiting for small hats.

For example, if borrowing costs remain high and credit tension, smaller companies may feel pressure first. This scenario may tempt short -term speculators in products like Tza. Of course, the leverage reduces both directions – it may mean gathering in small hats sharp losses for anyone carrying the box.

Is betting against smaller companies a good idea?

Small companies are generally more vulnerable to high interest rates, because they depend greatly on borrowing and have a limited pricing power compared to large covers.

With the lack of rates in the United States and tight financing conditions, many smaller companies face margin pressure and risk reinstumment. In addition, the slowdown in economic growth tends to reach companies that focus locally on difficulty, while large multinationals can depend on outpatient revenues.

The evaluation also plays a role. Despite the poor performance, small hats remain relatively expensive based on the front complications due to the presence of momentum in weaker profits. Remember that 43 % of the small hats are unstable.

Tza ETF provides a means of contradictory investors to express a declining point of view that small hats can continue to delay in the event of prices for a longer period or a shrinkage appears.

It is worth looking?

I do not usually think that betting against the market is a good idea. After all, the stock market has achieved positive returns in the long run. Over the past five years, the share price of this fund has decreased by 94 %.

However, there is some evidence that small hats for us can struggle in the current and somewhat expected environment. With this in mind, it is worth considering, although the longevity of the investment may be doubtful. It is in my monitoring menu.