[The information in this column previously appeared in Andrew Tobias - Money and Other Subjects, and is used with the kind permission of the author.]

A reader writes in: "If you’d like to short the market (which you’d have to be insane not to do), there is an exchange-traded fund, RSW, which moves 2 times inversely to the S&P 500.  I have a working order to buy RSW at 83 in my IRA accounts.  It got close before the market went down again.  I would buy more if the market continued to rise." -Joe

Andrew Tobias responds:  Normally, shorting the market is dumb.  First, who the heck knows which way it will go? Timing the market is all but impossible.  Second, profits from short sales, when you do make them, are always taxed as short-term gains, even if you’ve held the short position for years.  Third, you have to pay dividends on your short position (and only big players get their brokers to share the interest on the cash received from their short sales).  Fourth, your losses are, at least in theory, unlimited.  There is a psychological cost to assuming that risk that can be hard to handle.  Fifth, and most importantly, the market’s long-term trend is up.  Between inflation and real growth, how could it not be?  Productivity marches along with technology; population grows; and profits, when not paid out in dividends, enhance share value.  (Even a savings account will hit new highs each year, so how bright do the CEOs of an S&P 500 company need to be to grow the value of his or her enterprise at least a little in most years?)

That said, there are certainly times the market drops sharply.  If it were to drop 20% from here (say), RSW would rise 40%.  And if you held this ETF (exchange-traded fund) for more than a year, your realized gain would be lightly taxed.  And, where shorting is never legal within a retirement account, going long RSW is – not least because your loss is not unlimited.  (You can lose all you invest, but no more.)  So, many of the disadvantages of shorting are avoided.

That still doesn’t make it easy to time the market.  I admit I would be surprised if we have seen the bottom – so owning some RSW could be a prudent hedge.

But who knows?

I would be surprised by a dot.com-style crash, a la the year 2000, or a Nikkei Dow style crash (down to 13,000 today, 18 years after its 1990 high of 40,000) – or a Depression.

Among the reasons:

*Whatever the woes of the housing market, the stock market has not been a bubble, and thus has less far to fall. 

*The dollar is low, making U.S. stocks, assets, goods and services relatively cheap.

*Technology races along, a tremendous spur to growth and prosperity.

*Many of the S&P 500 derive much of their business from the global marketplace – or could.

*We (and the rest of the world’s central banks) have learned a lot of lessons from the Depression.

*A change in U.S. leadership can only help.

Still, Joe has obviously got me thinking.  RSW could be a good hedge.

Andrew Tobias is the author of a number of bestselling books including  "The Only Investment Guide You'll Ever Need" and "Managing Your Money," the leading computer software in the field of personal finance'. He is a contributor to the New York Times Sunday Magazine and is a graduate of Harvard College and Harvard Business School.  He is also the treasurer of the Democratic National Committee.