Interesting short piece of the failure of ETFs

Weiss

From Coinflation:

On why ETFs are America's worst investment

derryb

<< <i>From Coinflation:

On why ETFs are America's worst investment >>



But you can make a bundle shorting the market with inverse ETFs. VXX is my big money maker.

Weiss

True it applies mostly to buy and hold people. If you move in and out quickly they're ok.

cohodk

Not all ETFs are created equally.

Some such as DIA, SPY or QQQQ have an extraordinary record of matching their respective market indices.

GLD and SLV have done a pretty good job of tracking spot prices on gold and silver as well.

yellowkid

The index fund buying and selling must be very predictable, I could see where you could do well trading in it, but I would be a fish in with sharks in a market like that. Good read.

wilskyy

ETF's can be tricky... best to stick with individual stocks unless you are dealing with a relatively high equity portfolio

roadrunner

One success of the ETF's is that it has taken a lot of money away from the actual companies that used to see more investor dollars. GLD and SLV have taken away lots of money that would have otherwise been funneled into gold/silver miners for example. So that's a failure of the actual company stocks that have been affected by their associated ETF's.

roadrunner

derryb

<< <i>One success of the ETF's is that it has taken a lot of money away from the actual companies that used to see more investor dollars. GLD and SLV have taken away lots of money that would have otherwise been funneled into gold/silver miners for example. So that's a failure of the actual company stocks that have been affected by their associated ETF's.

roadrunner >>


In most cases the ETFs (except for index funds) buy the indivdual stocks the same way a mutual fund does. In the case of GLD and SLV, they purchase the actual metal which in turns drives up the metal's price which in turn drives up the mining stocks.

cohodk

<< <i>One success of the ETF's is that it has taken a lot of money away from the actual companies that used to see more investor dollars. GLD and SLV have taken away lots of money that would have otherwise been funneled into gold/silver miners for example. So that's a failure of the actual company stocks that have been affected by their associated ETF's.

roadrunner >>



FWIW---I do believe the massive increase in the number of ETFs, especially leveraged have had a marked effect on the stock market. And that does not make me feel all warm and fuzzy inside. Those leveraged ETFs are fun to trade through.

roadrunner

GLD is an "associated" ETF for the gold miners even though GDX is specific and buys the individual stocks. Where would have all the "gold investment" money that flowed into GLD since 2004 ($50 BILL) had gone if there were no GLD? Either the buyers would have had to go out and buy physical gold, paper futures/options, or they would have bought mining stocks. I'll let you decide which was the most likely/convenient/sensible option for gold oriented traders/buyers if GLD did not exist. Note that GLD and GDX have both been around 4-6 yrs but GLD is 8X the size. Just coincidence that much of the wind went out of the sails of the miners in 2004, when GLD lifted off? That was their best 3 yrs in the past decade and hasn't been duplicated since.

roadrunner

derryb

Investment dollars go where investors think they will get their best return. All ETFs have done is offer more variety. This of course takes dollars away from other investments such as individual stocks. If anything the competition from ETFs will force individual public companies to do a better job of providing profit to their stockholders.

Don't forget the loss of faith in real estate has shifted (any remaining) investment dollars into other investments, including ETFs. I would guess that the cause of recent dollars into ETFs is a result of dollars out of real estate.

fishcooker

The dude in the article complains about USO that he bought in 2009. USO had been a failure at matching the moves of crude oil for years prior. How many years does it have to fail, before people figure out it doesn't match the price of oil?

And where was the Merrill Lynch broker? Why didn't he know anything useful about USO?

AboutAg

<< <i>On why ETFs are America's worst investment >>



Or, "America's Worst Article on Commodity ETFs."

Why do I say that? The issue they refer to (contango, which is essentially the future's equivalent of storage fees) affects EVERY safe investment that tracks the price of commodities.

The article fails to mention that futures themselves are just as subject to contango as ETFs.

The 'pre-rolling', though, is a different story (assuming it is true).

jmski52

never buy a commodity etf from a broker who can't tell you what contango is.

carew4me