How do you bet against the stock market

Join the NASDAQ Community today and get free, instant access to portfolios, stock ratings, real-time alerts, and more! It is now widely known that hedge fund legend David Einhorn is bearish on iron ore producers.

If his comments to that effect in October did convince investors of that fact, then Greenlight Capital's letter to clients issued earlier this week should do the trick.

In that letter, Greenlight says it holds a bearish view of iron ore equities and that is has "shorted a number of stocks in the sector. What is known is that Einhorn spoke bearishly about iron ore and steel names as far back as October and if he opted to short stocks such as BHP Billiton NYSE: BHP an Vale NYSE: VALEthe world's largest iron producer, back then there is a good chance those trades are not going in his favor. The reason being is that the Chinese economy has started to turn for the better, causing iron ore prices to surge.

While there is no exchange-traded product backed by iron ore futures, there are plenty that hold stocks such as BHP and Vale. Investors can use some of the following funds to bet on high iron ore prices while potentially profiting from what could be a rare misstep by Einhorn. MXI Vale, BHP and Rio Tinto NYSE: RIO are the world's three largest iron ore producers and that trio combines for almost 18 percent of MXI's weight.

That gives this ETF plenty of exposure to increasing demand and prices for the commodity used in the production of steel. The resurgent Chinese economy has been a boon for MXI as the fund has gained over eight percent in the past 90 days. However, investors need to note exactly what they are getting involved with with MXI. Meaning this ETF is about much more than iron ore production. MXI is also home to chemicals producers such as DuPont NYSE: DD and Dow Chemical NYSE: DOW along with fertilizer names such as Potash NYSE: Those factors are not the big sticking points with MXI, though.

MXI's issue that investors need to be cautious of is exposure to gold miners, one of the more uncooperative sub-segments of the materials universe.

In the past three months, the Market Vectors Gold Miners ETF NYSE: GDX is off almost MXI's exposure to pure play gold miners is not significant enough to make this ETF a loser as iron ore prices rise, but the fund's exposure to gold mining equities is enough to mute MXI's upside. EWA A predictable choice given that Australia is one of the world's largest iron ore-producing countries and that China is Australia's largest trading partner.

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BHP, EWA's largest holding, and Rio Tinto combine for johnny cash covers neil young 15 percent of EWA's weight. Both companies are diversified mining firms, but both are also highly dependent on iron ore as a revenue and profit driver. In iron ore accounted for 42 percent of BHP's profits. In the same year, Rio Tinto derived nearly half its revenue from iron ore production.

Global X China Technical indicators swing trading ETF NYSE: CHIM Auto vega for binary options trading is often perceived as the primary destination for imported iron ore, but it how do you bet against the stock market be noted the world's second-largest economy is looking ways to earn extra money in south africa reduce its dependence on imported iron ore.

China is seeking to reduce dependence on imported iron ore by increasing the proportion of domestic iron ore to forty-five percent by China is already the world's largest steel producer, so its efforts to increase domestic iron ore production make sense, particularly at a time when prices are rising. On the other hand, the ETF has surged FXI by nearly basis points along the way.

For more on ETFsclick here. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Join Today Already a member? Bet Against Einhorn on Iron Ore With These ETFs January 24, This article appears in: InvestingCommoditiesFutures. BHPEWAFXIGDXMXI.

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