tag:blogger.com,1999:blog-7366878066073177705.post1563885788182492228..comments2024-02-09T18:16:45.614+00:00Comments on The Psy-Fi Blog: Exotic ETFs Are Toxic ETFstimarrhttp://www.blogger.com/profile/06254802085744425067noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7366878066073177705.post-25798496433338876852009-07-07T01:29:28.565+01:002009-07-07T01:29:28.565+01:00Hi,
Just found this blog and I like it a lot. How...Hi,<br /><br />Just found this blog and I like it a lot. However you should point out that leveraged ETFs do have their place in knowledgeable investors' portfolios, but not as part of a buy and hold strategy. They replicate a multiple of daily results, leading to path dependent returns, and their issuers explain this clearly. Explaining their usefulness as vehicles for taking short-term views is much more productive than labeling them as toxic.schttps://www.blogger.com/profile/07927940131064831221noreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-51296695847511719902009-06-26T18:54:49.995+01:002009-06-26T18:54:49.995+01:00And just for fun I'll respond :)
Munger said ...And just for fun I'll respond :)<br /><br />Munger said something along the lines that he never saw anyone get rich through sector selection. However, I don't see anything wrong in mining ETFs or pharma ETFs or the like - perfectly fine ways of constructing a portfolio. Where it goes horribly wrong is when you start getting ETFs constructed on artifical categories designed to appeal to investor sentiment - designer ETFs if you like. The problem is that the designation "ETF" for most people implies some level of sensible stability, almost a synonym for index tracking. Only it's not.<br /><br />The ultra-leveraged stuff is ultra amazing as you point out. Toxicity personified. More on that another day!timarrhttps://www.blogger.com/profile/06254802085744425067noreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-20830056968696212272009-06-26T18:10:06.982+01:002009-06-26T18:10:06.982+01:00Just for fun, I don't 100% agree Timarr.
Obvi...Just for fun, I don't 100% agree Timarr.<br /><br />Obviously vast quantities of your post is bang on the money. And versus passive index investing in the broadest market possible, a la Bogle, then everything but big national marketwide ETFs are clearly an anaethma. <br /><br />But I do think there's a place between ISF (the iShares FTSE tracker) and buying shares in BP or Shell, let alone Dana Petroleum or Shell.<br /><br />Sometimes people do want exposure to an asset class or theme or sector. Repeatedly over the years I've seen sector wide movements be much more important than stock picking within that sector. <br /><br />I think not-too-exotic ETFs are a valid way for some investors to get such exposure.<br /><br />The ultra-short and leveraged stuff is much worse than it sounds - and then you imply. They're closed daily, so if the market doubles in three months, you won't perforce get twice that doubling, it all depends on how the market closed on all the days in between (and more, to do with the cost of debt etc, which I won't pretend to have fully investigated).<br /><br />Now that's a truly toxic ETF. :)Monevatorhttp://monevator.comnoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-47844817144683079132009-06-26T15:22:08.449+01:002009-06-26T15:22:08.449+01:00It's typical Wall Street. Money for themselve...It's typical Wall Street. Money for themselves and nobody cares about the invetor.<br /><br />Prediction: Why stop at 3X funds. The quands and quints ae next. And what about the 10X ETF?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7366878066073177705.post-73869682386601314592009-06-26T12:24:05.929+01:002009-06-26T12:24:05.929+01:00Excellent stuff.
A great example of how financial...Excellent stuff. <br />A great example of how financial institutions take a simple idea and complexify it in order to charge more.Anonymousnoreply@blogger.com