Strategy No. 2: Consider Inverse ETFs In the past, I've compared exchange-traded funds (ETFs) to Lego blocks. That's because ETFs allow you to build, brick by brick, a portfolio to fit your specific investment objectives. An excellent example of just such an ETF strategy is inverse ETFs. Inverse ETFs are bets against the market. That means they go up when the market goes down. Say you're convinced that tech shares are set to crash in 2022. You can bet against the Nasdaq-100 by buying the ProShares Short QQQ (NYSE: PSQ). The Nasdaq-100 includes all the large tech names, including Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT) and Amazon (Nasdaq: AMZN). If the index drops 10%, this ETF will rise by the same amount. There are even leveraged versions of this short bet. For example, invest in the ProShares UltraShort QQQ (NYSE: QID), and when the Nasdaq-100 drops 10%, the fund will jump around 20%. Finally, the ProShares UltraPro Short QQQ (Nasdaq: SQQQ) offers triple-short exposure. A 10% tumble in the Nasdaq-100 could generate up to 30% returns. Invest in inverse ETFs at the right time, and you can make more money more quickly during a market crash than you ever did in a bull market. Strategy No. 3: Bet on "Black Swans" Popularized by my friend Nassim Nicholas Taleb, a "black swan" is an event that's rare, high-impact and difficult to predict. In investing, black swans happen when financial markets fall fast, hard... and unexpectedly. Think of the crash of October 19, 1987, when the Dow dropped 22.6%. Such sharp falls occur far more often than mainstream financial models predict. A black swan always comes out of the blue. So what's the best way to protect your portfolio from black swans? You could engage in a complex range of options strategies like Taleb does. Or you could buy an ETF that implements an options strategy for you. Specifically, the Cambria Tail Risk ETF (CBOE: TAIL) invests about 5% of its assets in a portfolio of out-of-the-money put options on the S&P 500. It holds the rest of the assets in 10-year U.S. Treasurys. Both Treasurys and put options tend to rise during a market crash. And you can expect the Cambria Tail Risk ETF to do the same. But like any other form of insurance, this protection costs money. Cambria spends roughly 1% of the fund's total assets purchasing put options over rolling one-month periods. So this "insurance" costs you about 1% per month. How has this strategy performed in real life? In 2021, the S&P 500 gained around 27%. Over that period, the price of the Cambria Tail Risk ETF fell by 13%. As the chart above confirms, this ETF trades like the inverse of the S&P 500... except with less downside. This means that you can expect the Cambria Tail Risk ETF to soar during any market crash. The bottom line? Whether it's short-term market jitters... a full-blown 10% correction... or the start of a 20%-plus bear market... make sure you have a plan to crash-proof your portfolio. As Jim Rogers, George Soros' first investment partner, advises, "Look down before you look up." Good investing, Nicholas | 
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