Posted on 01/11/2014 2:07:27 PM PST by RoosterRedux
What Are ETFs?
In the simplest terms, Exchange Traded Funds (ETFs) are funds that track indexes like the NASDAQ-100 Index, S&P 500, Dow Jones, etc. When you buy shares of an ETF, you are buying shares of a portfolio that tracks the yield and return of its native index. The main difference between ETFs and other types of index funds is that ETFs don't try to outperform their corresponding index, but simply replicate its performance. They don't try to beat the market, they try to be the market.
ETFs have been around since the early 1980s, but they've come into their own within the past 10 years.
ETF Benefits
ETFs combine the range of a diversified portfolio with the simplicity of trading a single stock. Investors can purchase ETF shares on margin, short sell shares, or hold for the long term.
*snip*
Long-Term Growth of ETFs
It was in the late 1970s that investors and market watchers noticed a trend involving market indexes - the major indexes were consistently outperforming actively managed portfolio funds. In essence, according to these figures, market indexes make better investments than managed funds, and a buy-and-hold strategy is the best strategy to reap the advantages of investing in index growth.
(Excerpt) Read more at nasdaq.com ...
I stared a Scottrade account and stick to ETFs mostly. I’m not confident enough yet to go all in on individual stocks. SPY,QQQ, DIA and IWM.
but that's because the fellow next in line who can barely afford to buy groceries is paying for it!
Oops, my bad. Not EBT . . . ETF (different animal).
I’ve been in the business since 1978 (now retired - investment banker) and I stick with ETF’s exclusively. I watched my brother lose a small fortune on Enron and vowed to stay away from individual stocks for the rest of my investing career.
That's why my local grocer now stocks lobsters and oysters in the shell. I am often in line behind folks with those items...and all I have is Oscar Mayer bologna and a fresh tomato.
But I am happy.
That’s quite plausible...
This is the phase where your computers are trading on your accounts at night while you’re asleep.
When they’ve amassed enough money, their complete takeover will be under way.......
I’ve been watching this one and would like to put some into it but I don’t know whether it is safe or not. I would feel better if it was Ishares or Spyder or somebody I had heard of. I think automation is goiung to see some major growth in the future.
Robo-Stox Glbl Robotics&Automation ETF (ROBO)
http://finance.yahoo.com/q?s=robo&ql=1
Then you know that ETFs are a rip-off because of:
- management fees:
- bid-ask spread on the ETF;
- bid-ask spread on the underlying;
- rolling over the underlying futures contracts and re-balancing; and
- the compounding effect of the above.
An ETF based on futures contracts (commodities, indexes and financials) gradually trends to zero value over the long term. At worst, only invest in an ETF very short term, at best, not at all. They're like Vegas. The house always wins, the house in this case being the ETF promoters, investors in the underlying futures contracts, brokers and exchanges for both the ETF and the underlying futures contracts and the market in general.
ETFs based solely on underlying stocks are the least harmful, ETFs based on futures contracts are worse and leveraged ETFs based on futures contracts are the worst.
Options have many of the same inefficiencies, notably the bid-ask spread of often highly illiquid contracts.
If you must speculate on the price direction of commodities, indexes or financials, trade futures on the Chicago Mercantile Exchange. Then you only have one middleman. You'll need to roll over contracts as they approach expiry if you want to maintain your 'position', street talk for your bet. Only buy a bit. Futures are leveraged roughly 6:1, whereas ETFs are 1:1, 2:1 or 3:1.
Caution: unless you are in the business, 95% of investors do more poorly than the market.
Some mornings there is catnip on my keyboard and, according to my browsing history, someone has been searching for pet care-based and herbal agriculture ETF's.
Just saying.
Whatever you are drinking...I think you should share!
I have thought about adding it as a very tiny sliver of my portfolio.
The only problem with ROBO holdings is that the real excitement is in 3-D printing (DDD and SSYS), and I just can't tell if 3-D printing is ready for prime time.
Yes, it is fascinating and seemingly miraculous...but is it ready to create real value among manufacturers and designers such that it can bring home some bacon.
Go watch videos on 3D Systems and Stratasys and ask yourself if you feel that their promotional videos are substantial or if they are all sizzle and no steak.
I got the feeling that they are still selling sham-wow.
I have no doubt that one day (perhaps soon) this industry will strike gold...but when...and what other industries and companies may arise to push them aside.
Just saying.
Nothing personal, Rooster. I know a guy who lost over $10 million using a leveraged ETF to bet that natural gas prices would rise, in early 2009. If he had just used futures contracts, he would 'only' have lost $7.0 million. The promoters actually dropped by his office and congratulated him on having such big balls. Their short leverage nat gas ETF traded at under 1% of its value three years before. Their long fund would not have come close to making up the difference. They keep doing negative splits to paper over the truth. As a result, I researched the topic. People have done peer-reviewed papers supporting what I told you. I would be happy to share.
Absolutely! It is wonderful not to live on the welfare plantation. You know, our dignity is not for sale.
This article is aimed at introducing mutual fund investors to good old basic index and sector ETF's which contain nothing more than the underlying stocks.
The Standard & Poors composite index (SPY) beats the living tar out of most mutual funds with very little costs.
To those considering ETF's, don't throw the baby out with Kennard's bath water.;-)
And Kennard, where's my share of your cocktail!
Take a gander at biotech ETF's in NASDAQ and S&P.
In my mind they are a little bit like Coca-Cola. Once they find a popular recipe, they can produce it like flavored water.
Robotics companies are basically machine tool companies which have a software component. Even Intuitive Surgical (maker of Da Vinci surgical robot) has suffered lately (from attacks by greedy lawyers).
BTW, if said lawyers claims are eventually deemed frivolous, Intuitive Surg. will recover nicely IMHO.
I stay with what I understand. Equities.
That is a good idea to see which ETF's have a stock you're interested in. Same with mutual funds.
Good, sound advice! Thx.
Jack Bogle and I agree.
Many years ago I put my parents in some great American Funds (Washington Moo, Cap Income Bldrs, Fundamental Investors). They had a great retirement.
But Spy (which wasn't around then) beats the tar out of all of them.
I use SPY as my foundation...and spread out from there.
I look at SPY as my little fishing pier. I stand on the end of it and cast for higher returns. When the skies turn ugly, I pull everything back into SPY.
I live simply...so that if the market takes a dive, I will wait until it recovers.
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