Best ETF or Stock for Given Scenario

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Without shorting an ETF or particular stock, is there any etf or stock that would see an increase in value when borrowers cannot pay back their student loans?

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Probably SoFi when it goes IPO. They focus on student loan refinancing and lending money to financially savy young professionals with high income. 

There's no publicly accessible way to do that. The best way someone came up with was to short specific companies affected http://www.bloomberg.com/news/articles/2015-08-11/hedge-fund-see...

*If* you could find a portfolio of student loans that you think are mispriced and *if* that portfolio belonged to a single investor (e.g., a pension fund), you could make inquiries to that investor about a possibility of "doubling down" on yields on that portfolio with you as a counter-party. But *if* you are interested in doing that, my guess is that you're e-mailing your dedicated Goldman / Morgan / Deutsche rep, not fatwallet.

My understanding is that US student loans cannot default, only go into "payments suspended" mode and accrue more interest (which I guess still defaults at death), but you'd have to find someone willing to agree on the definition of "default" with you.

If you are looking to hedge yourself against a student loan bubble, 1) increase your bond allocation and 2) determine to not sell at lows.

You will probably do better in a recession by keeping from doing stupid things than by buying the right niche fund now.

prostoalex said:   There's no publicly accessible way to do that. The best way someone came up with was to short specific companies affected http://www.bloomberg.com/news/articles/2015-08-11/hedge-fund-see... 

*If* you could find a portfolio of student loans that you think are mispriced and *if* that portfolio belonged to a single investor (e.g., a pension fund), you could make inquiries to that investor about a possibility of "doubling down" on yields on that portfolio with you as a counter-party. But *if* you are interested in doing that, my guess is that you're e-mailing your dedicated Goldman / Morgan / Deutsche rep, not fatwallet.

My understanding is that US student loans cannot default, only go into "payments suspended" mode and accrue more interest (which I guess still defaults at death), but you'd have to find someone willing to agree on the definition of "default" with you.

  
Appreciate the insight, but as a novice investor, I don't have the cajones to short any stocks---unlimited risk is something I can't stomach.  

If you are a novice investor, you shouldn't go anywhere near this stuff.

delete

coupons2828 said:     
Appreciate the insight, but as a novice investor, I don't have the cajones to short any stocks---unlimited risk is something I can't stomach.  

With your specific position look into buying puts - you will be paying for a right to sell someone the stock at the contracted price on the contracted date.
Your downside is limited to the amount of money you paid for those puts. Your upside, however, is the delta between contract price and actual price on the date of the contract.
Options are expensive, though - not only the brokerage fees for options are higher than stocks, but each contract is for 100 shares, which means that pay-to-play price can get pricier as the share price increases.



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