Skip to main content

Inverse exchange traded funds, especially leveraged ones, have taken a lot of heat since hitting the market not too long ago. Some say they helped cause the market's collapse in 2008 as well as this year's flash crash. Others say inverse ETFs are bad bets for individual investors because they are costly and fail to properly track their indexes.

And then some analysts say inverse ETFs -- when used correctly -- are effective tools for investors to make money in an increasingly volatile and confusing market.

TheStreet

spoke with ETF experts Tom Lydon, editor of

ETF Trends

, and Christian Magoon, CEO of

Magoon Capital

, to get their suggestions as to the most intriguing inverse ETFs:

ProShares UltraShort 20+ Year Treasury

(TBT) - Get ProShares UltraShort 20+ Year Treasury Report

"The stampede into fixed-income has pushed prices higher and yields lower -- particularly in long-dated Treasuries, where yields are best. When the Fed raises rates, trillions of these dollars could be at risk as long-dated Treasury ETFs lose principal; TBT is a play on this scenario and should gain if Treasuries fall."

-- Tom Lydon, editor of ETF Trends

Direxion Daily Retail Bear 2x Shares

(RETS)

"Although retail stocks have had a substantial run over the last month, mysteriously more than doubling the

S&P 500

TheStreet Recommends

in fact, economic realities suggest this will not continue. Future consumer spending looks tepid at best, primarily due to the high unemployment rate, which does not seem to be improving with much pace."

-- Christian Magoon, CEO of Magoon Capital

ProShares UltraShort Europe

(EPV) - Get ProShares UltraShort FTSE Europe Report

"Ireland's widespread bank bailouts just go to show the eurozone is not out of the woods yet; further, Greece is still dealing with its debt and Spain's unemployment is soaring. What's more, the euro is getting stronger and further quantitative easing by the Fed will only help it, but Europe's exports may suffer as a result."

-- Tom Lydon, editor of ETF Trends

Direxion Daily Financial Bear 3x Shares

(FAZ) - Get Direxion Daily Financial Bear 3X Shares Report

"The additional operational and administrative regulations recently imposed on financial companies are likely to weigh down revenues and increase costs. As these firms report third-quarter earnings and begin to look ahead to the end of the year, don't be surprised to see more negativity toward this area of the market develop."

-- Christian Magoon, CEO of Magoon Capital

ProShares UltraShort S&P 500

(SDS) - Get ProShares UltraShort S&P500 Report

"While the S&P 500 is coming off its best September in 71 years, October is historically the worst month for stocks. With third-quarter earnings season getting under way and fewer positive earnings surprises expected, negative economic news could take center stage, forcing the S&P 500 to retrace some of its recent burst."

-- Christian Magoon, CEO of Magoon Capital

>To submit a news tip, email:

tips@thestreet.com

.

RELATED STORIES:

>>Corporate Bonds Drive Loomis Sayles Manager

>>Dividends Draw Attention to Big-Cap Technology

>>Cloud-Computer IntraLinks Rising Since IPO

Follow TheStreet.com on

Twitter

and become a fan on

Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.