Stocks make a lot of sense in the long run. In the short run, though, the ride can get a little bumpy.

Even the big moneymakers on Wall Street get scared when the market declines. And even they hedge their bets using a strategy that you can employ yourself.Richard Snow, of Snow Capital, whose All-Cap Value Fund has averaged 20.25% a year since it opened in 1992, holds over 280,000 shares in the hedging strategy I’m about to reveal to you.

And John Keeley, who’s averaged gains of 16% per year from 1993 to 2007, put his money down on 15,000 shares of what I like to call the Falling Market Profit Plan.

See, the bears are winning the fight these days. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq are all down roughly 16% since October 2007. In the same time frame, major market hedges like commodities are gaining. Gold has been on an eight-year run, returning 233% at its high. Oil has increased 1,300% since 1998.

Any time prices run high for these hedges, there’s talk about a bubble that is followed by talk about when it’ll burst. And for normal investors, once the speculation starts on these commodities, buying at reasonable prices can be tough.

And sometimes it’s too expensive for the big guys, too. Which is why they crafted their own, cheaper systems for hedging market risk. They made sure that no matter what side of the market they’re on they’ll make money.

Going Super Short

According to the chairman and CEO of one of the most successful examples of the Falling Market Profit Plan, which has raised more than $16 billion since June 2006, “Our growth has been driven by declining markets and predictions of worse to come. Investors want protection.”

Even the financial outlets are getting in on this. They say that the Falling Market Profit Plan gives you “twice the protection for your hedging dollar” and that it’s “great at guarding against a decline in the general market or a specific sector.”

Marketocracy and the M100 (NASDAQ: MOFQX), its list of the 100 best-performing online investors right now, recently put their money into this little-known investment, prompting Forbes to comment that they’ll “profit doubly as [the market] continues to decline.”

Contrary to what you may be thinking, I’m not suggesting buying puts. I’m sure you’re aware of ye olde metaphor… Buying put options on the stocks you’re holding is like buying insurance for your car because you hope you don’t have to use it.

Times are different. Today, you want hedging to be a vital part to your portfolio… and you want that insurance to return more than you put into it. After all, from the looks of the market, we could see another drop of at least 18% on all the major averages.

You could make twice as much as that, though, through an instrument that smart money managers use to protect themselves. You too can skim money from their own institutional hedging plan.

Let me explain…

Buy When Everyone Says Sell

The Falling Market Profit Plan represents an inverse way to trade the market. Essentially, when the market declines, the price of this index moves the same amount.

But if you double down, it will increase twice as much as the market falls.

Gone are the days of shorting specific stocks or buying puts on indexes, which can become pricey. By buying shares of one index, you’ve hedged your stock bets.

Not only can you hedge against the market, but you can also hedge against specific industries. If, for example, you have a lot of tech stocks that you want to hold onto for the long term, you can also buy a double-down opportunity on the tech sector to make more than what you’re losing on your long-term holdings.

I’m sure you wouldn’t argue with that. While the Nasdaq has fallen 17% since October, investors in this plan could have made 31% in the first quarter of 2008.

These are in no way long-term investment opportunities. Simply, it’s a short-term way to beat Mr. Market while stocks take a bit of a dive.

Death Cross Trader subscribers are already making money on the sidelines with their Falling Market Profit Plan.

Your Personal Falling Market Profit Plan

Back in April, I told Death Cross Trader subscribers that the market would take a major tumble.

I suggested two major ways to hedge against this fall. They could simply invest a bit of cash in the Falling Market Profit Plan… or double down on a supercharged opportunity.

So far, we’ve hit a high profit of 9% on the Falling Market Profit Plan — and even more on our supercharged investment.

Learning all about the Falling Market Profit Plan could make you at least 16% gains while hedging the rest of the stocks in your portfolio. Volatility could push those gains even higher…

And our secret supercharged option on the Falling Market Profit Plan could return more than 57% in 30 days…

You have to admit, those are pretty good gains to cover the losses you might incur in the short term on your long-term stock portfolio.

By joining Death Cross Trader today, you’ll receive the free report I’ve already put together called “Buy When Everyone Says Sell.” It’ll tell you all you need to know about the Falling Market Profit Plan, along with the best strategy to hedge your bets just like the big money managers.

Ann Sosnowski

Editor, Death Cross Trader

Source: Buy When Everyone Says Sell