Let's say I have strong reasons to believe that an economic sector of a particular country will increase/decrease in the next few years.

How can I leverage this information financially?

Should I focus on government bonds or on the private companies in that sector or on something completely different?

  • Leverage as in take advantage of the information or leverage as in increasing the rate of return in a multiplicative fashion? – Bob Baerker May 1 '19 at 20:27
  • More like taking advantage of the information – icenac May 1 '19 at 20:28

Trade option on ETF that follows that sector in that country.

  • Thanks @gamma, I'll take a look at that. I'm not yet very familiar with the available instruments in finance but I vaguely know what options and ETFs are – icenac May 1 '19 at 19:50
  • 2
    It depends on the time horizon but it might be better to just buy the ETF outright, rather than an option on it. – 0xFEE1DEAD May 1 '19 at 19:57

This question is pretty vague, as it depends on the specific country/sector.

Generally speaking, a sector ETF for that particular country/region is a good starting point. If none exist, stocks or corporate bonds could be an alternative.

Government bonds/FX products are less attractive as they're more closely tied to the overall GDP and are only a proxy for the specific sector you're interested in.

Other considerations are whether it's a developed or emerging country, the local currency, the main sectors/commodities that contribute to the economy, the correlation with other countries/asset classes, liquidity...

Last but not least, if you have strong reasons to believe that, other people might too, i.e. it might already be priced in and limit your profit potential.

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