Exchange Traded Funds, Pros & Cons --Investor Thread April 19, 2015

Weekly investment & finance thread ^ | 04/19/2015 | Freeper Investors

[expat_panama]

[from IBD: Should ETFs Be In Your Investment Portfolio?] While ETFs have existed for several decades, their popularity and diversity have exploded in recent years. But many investors are just learning about them. Those looking for tips on how to invest in ETFs just need some basic information to get started. In basic terms, ETFs can be thought of as mutual funds that trade like stocks. But their portfolios can contain U.S. and foreign stocks, bonds, futures, physical commodities or currencies. And ETFs choose the securities for their portfolios with an investment objective in mind. These investment goals include growth of capital through price appreciation and income generation through stock dividends or bond interest. And ETFs pursue these objectives in a variety of ways. These include exposure to the broad stock market through such ETFs as SPDR S&P 500 (ARCA:SPY) and PowerShares QQQ (NASDAQ:QQQ). Or they can focus on narrow segments of the market, like high-yielding stock funds. That's an area covered by Vanguard High Dividend Yield (ARCA:VYM). ETFs tend to have lower fees and better tax efficiency compared with mutual funds. They have the flexibility to be traded on a short-term, even intraday basis, but can also be held for the long term as part of an asset allocation plan. How can you find the best ETFs for your portfolio? "We like to use ETFs to track a broad-based index or sector, and will typically use mutual funds when we feel that an active manager can provide a benefit either from a performance, risk reduction or strategy standpoint over what we expect from the index," says Michael Ball, lead portfolio manager of Weatherstone Capital Management. With thousands of ETFs to choose from, it can seem overwhelming to pick ones out that are right for you. How to cope? Start with the end in mind. ... [snip]
--and: Exchange-Traded Funds (ETF) Center - Yahoo Finance Exchange-Traded Fund (ETF) - Investopedia Best ETFs (Exchange Traded Funds) | US News Best Funds --and from our leaders always there to help us: What is an ETF?... ...Like mutual funds, ETFs offer investors a way to pool their money in a fund that makes investments in stocks, bonds, or other assets and, in return, to receive an interest in that investment pool.  Unlike mutual funds, however, ETF shares are traded on a national stock exchange and at market prices that may or may not be the same as the net asset value (“NAV”) of the shares, that is, the value of the ETF’s assets minus its liabilities divided by the number of shares outstanding. Things to Consider before Investing in ETFs ETFs are not mutual funds.  Generally, ETFs combine features of a mutual fund, which can be purchased or redeemed at the end of each trading day at its NAV per share, with the intraday trading feature of a closed-end fund, whose shares trade throughout the trading day at market prices... [snip]		That was the pros, here's the con's side: Should Mutual Funds Be Made Illegal? - Matt Levine, Bloomberg Why Hillary Clinton is going after hedge funds ETFs May Be Moving Stocks in Unseen Ways The Hidden Risks and Costs of ETFs - US News Exchange-traded funds: Too much of a good thing ... *    *    *    *    *    *    *    *    *    * This is the thread where folks swap ideas on savings and investment --here's a list of popular investing links that freepers have posted here and tomorrow morning we'll go on with our-- Open invitation continues always for idea-input for the thread, this being a joint effort works well.   Keywords: financial, WallStreet, stockmarket, economy.

[expat_panama]

Dang, small world. We got our first etf w/ scottrade and then opened one w/ Ameritrade too. So far I've gotten 3 etf's that mimic the 3 big indexes: SPY for the S&P500, QQQ for the NASDAQ, and IWM for the Russell 2000.

Where I am now is pondering whether I want to put my energy into working w/ specific etf's (like VHT) or stay with individual stocks.

[ConstantSkeptic]

For the most part we’ve adopted the Boglehead way of investing - sticking to low cost broad market index funds. (Well, we’re working our way there - we still own too much stock in his employer and my former employer.)

But we’ve also said that we’ll always invest 5% in stuff we find interesting. Up until now, that’s meant individual stocks in mostly local companies (3M, Target, etc.) in our IRAs. The healthcare ETF goes into that 5% bucket.

I have no idea what my husband wants to do with the TDAmeritrade account, whether it will be a sector investment or a broad market one. He’s going to retire in a year and part of this experiment is to see who he feel most comfortable with when it comes time to roll over his 401(k) - TDAmeritrade, Scottrade, or Vanguard. My rollover is at Fidelity.

[Grampa Dave]

I got into etfs when my former employer offered them as an option to mutual funds in our Fido 401K. These were the basic etfs that mimicked the S&P/Dow and later Nasdaq, etc.

The mutual funds in the Fidelity 401k, we could invest in at that time, were basically third rate funds managed by Fido invested in what. Their semi brand name losers often invested in left wing companies like the NY Slimes.

Fortunately, there was a great income/stock mutual fund managed by FPA and their current good guys, that fund has evolved into what is known as the FPA Crescent Fund, FPACX. That is one of 4 mutual funds we are invested in.

After I retired, I rolled my Fido 401k into my self managed IRA. I then got out of every mutual fund and got totally in various IRAs and added to and deleted them as new ones came out and the good CDs that we used to get from Fido. I rolled over the $ amount of the one good mutual fund into its kissing cousin, FPACX.

I could put a loss sell order in my ERAs versus trying to sell mutual funds after the closing bell rang. That saved our butts when the dot.com bust hit and the last melt down.

About ten years ago, thanks to FR, I looked at past mutual funds and ones I considered, and found that many of them invested in left wing losers like the NYSlimes. Often their investments in left wing controlled companies were in the highest % of dollars per company. We felt at that time, most mutual funds were not really good for us or the bastardized ones offered were not like the real name brand funds available to big investors.

My wife and I are both in our 70’s and need a modest monthly/yealy income flow from our CDs and ETFs. We don’t invest in an ETF that doesn’t pay more than a CD and still has the potential of having moderate to good gains in market value.

We invest in 8-12 ETFs at a time. Our ownership changes, with legitimate warnings from non gold/silver pimps, changes in management or investment goals. When Pimco fired its head of BOND, we got out.

I recalculate my stop loss orders on our ETFs every quarter or quicker if the ETF has a great run.

We own 3 other mutual funds besides FPACX, mentioned earlier. At our age, we have to shed/sell/cash a certain % of our holdings each month. Fido without any fan fare or publicity that we know of, started simple no cost system of selling a few shares of each mutual fund owned each month to help meet a % our minimum monthly withdrawals. Two funds still have modest increase over the last two years as well as dividends paid and the monthly selling of a few shares. One fund, PVSAX has a great $/% increase in a few years.

Yahoo has an excellent investment site/link. I have our current etfs and 4 mutual funds listed and tracked daily re ups/downs and news.

On that Yahoo site, I have a list of past ETFs and a current list of a few possible new ETFs. Most fail to meet or exceed what we are getting from our current ETFs.

[expat_panama]

One idea is to keep both accts, the advantage being that you’re carrying your life savings in more than one basket. Scottrade & TDAmer. are both great tho, they offer lots of choices, their fees are low, plenty of online info services, and it’s easy to move $ in and out for free.

[ConstantSkeptic]

My husband will roll the 401(k) to one firm, then may move some of the money to another firm depending on how he wants to invest it. He isn’t concerned about having it all at one location. Heck, I’m the accountant. I’m the one who will have to keep track of where the money is and figure out which accounts to draw RMDs from.

We’re especially concerned about having a clean, accurate rollover because his account is good-sized and includes original 401(k) contributions, after-tax contributions, and Roth 401(k) contributions. He works for a large corporation, so they should have their act together. Hopefully TDAmeritrade, Scottrade, and Vanguard would all handle the rollover equally well. But only one of those firms will be involved in that initial rollover.

[MichaelCorleone]

You mentioned TD Ameritrade and I wanted your opinion if you can give it.

Some people say to shun the major banks for local banks or credit unions. Following that line of thinking, would it then make sense to move their brokerage account to one that is not affiliated with a major bank?

I’m not saying that YOU are saying major banks pose unique risks such as bail-ins (for example), just would it be inconsistent to only bank local on principle, but keep the major bank’s brokerage/trading arm?

[expat_panama]

Good morning again!  Yesterday's percent± gains with stock indexes have turned out to be in lite trade --meaning don't expect it to last.  Then again, todays index futures are still upbeat (+0.35%) as are those for metals (+0.36%) after yesterdays touch of profit taking for PM's.  No econ reports today but lotsa news:

• Upbeat earnings lift stocks, Greek anxiety hits euro Reuters - 8 hours ago LONDON (Reuters) - World stocks climbed back toward all-time highs on Tuesday as upbeat European earnings reports and expectations of a sixth straight rise in German business confidence helped offset worries about a possible Greek default.
• MarketsFunding fears hit Greek bank
• Asian stocks join China stimulus-led global rally CNBC - 5:50am Asian stocks jumped on Tuesday, drawing support from the global rally in the U.S. and Europe induced by China's move over the weekend to stimulate its cooling economy.
• House approves new oil tax formula; debate centered on storm-term stability vs ... Dickinson Press - 10 hours ago House approves new oil tax formula; debate centered on storm-term stability vs. long-term loss. By Amy Dalrymple Today at 9:22 p.m.. Email · News Alerts. news Dickinson, 58602. Dickinson North Dakota 1815 1st Street West 58602. Updated Monday, 8:40 .
• Time to get out of US stocks: Mobius  Investors should rotate out of the U.S. markets into better-performing emerging markets, says veteran investor Mark Mobius, warning that corporate earnings in the world's number one economy are poised to disappoint.
• Gold holds below $1,200 due to firmer dollar, equities
• It's Time to Stop Reducing Taxes On the Wealthy - Rodrique/Sawhill, RCM
• A Growing Split On the Right About Taxes - Albert Hunt, Investor's Business
• Monetary Policy Staggers Global Growth - Richard Rahn, Washington Times
• Trolling for Trolls, Securing Capitalism's Future - David Oppenheimer, WS

[mad_as_he$$]

The worry story of the week.
http://www.freerepublic.com/focus/f-news/3281258/posts

[expat_panama]

...move their brokerage account to one that is not affiliated with a major bank?

Not sure there is one of those any more.  In today's electronic info age virtually all brokerages link up w/ a bank to move $ in and out.  Personally like it, in fact the first thing I did when I opened a TradeKing acct. was to xfer in $20 and promply xfer out $10.  Only after I'd checked that out was I willing to move in more.

[expat_panama]

Hmmm. My thinking is that the question of whether our president is a paid agent of the Iranians is not as important as the question of whether he's perceived as such my Iranian leaders...

[Jumper]

Those that understand EFTs also understand that for every market EFT there is an Inverse or market drop profit generation EFT - a good example is QQQ and QID. One up or one down the exact amount daily. This is another way to trade futures as well.

[cynwoody]

the table is wrong and seems to be guided by an over-generalization that all mutual funds are actively managed.

Yeah, the last line of the table is incorrect. ETFs, CEFs, and open-ended mutual funds can all be actively managed or be programmed to robotically emulate an index. ETFs, however, can do either more efficiently and conveniently.

These days, I own a mix of individual stocks and ETFs. No CEFs. No traditional mutual funds (except for a money market fund or two).

[expat_panama]

	Markets		Yesterday		Today's Futures
	stocks		Higher volume mixed: S&P -0.1% NASDAQ +0.4%; tech stocks strong		now at -0.32% was lower earlier
	metals		back up: gold > $1.2K & silver > $16		down to -0.61%

Later on this AM watch out for the FHFA home price index and Existing home sales. Weird news day today:

UK speed trader arrested over role in 2010 US 'flash crash'  gulfnews.com - 10 minutes ago Washington: A high-frequency trader was arrested in London over his alleged role in the May 2010 “flash crash” that briefly wiped out nearly $1 trillion (Dh3.67 trillion) in market value, the first time authorities have blamed manipulation for the

Japan's Nikkei rises above 20000 level, Europe stocks down Washington Post - 9 hours ago TOKYO - Japan's stock benchmark closed above the 20,000-level for the first time in 15 years Wednesday, encouraged by the country's first monthly trade surplus since 2012.

Oil prices drop as Middle East tension eases

How Robots Can Offer Good Mkt. Advice

A Guy Trading at Home Caused the 'Flash Crash'

Economists Have Discovered Really Bad Econ.

Gauging Impact: A Closer Look at Entrepreneurial Density

[expat_panama]

	Markets		Yesterday		Today's Futures
	stocks		Mixed volume mixed: S&P +0.5% NASDAQ +0.4%; small caps lag		off a bit %, just like before yesterday's gains
	metals		back down: gold < $1.2K & silver < $16		expecting rebound: +0.29%

This prolonged sideways market's putting everyone to sleep.   Not to worry, someone will ping us all here if something big happens --afterward...

[abb]

Ok. Now what. Up, down, up, down. This is a fine mess we’ve gotten ourselves into, Ollie!!!

[abb]

Not to worry, someone will ping us all here if something big happens --afterward...

With a gret big ole TOLDJASO to boot.

[abb]

So now Mrs. abb has dragged me off to Redneck Riviera for a few days, spending some of what has taken years to accumulate.

Now please excuse me while I go out on the balcony and watch the sunrise over Destin Harbor.

Phone me if there’s something I need to know.

http://www.urbandictionary.com/define.php?term=Redneck%20Riviera

[expat_panama]

Ok. Now what...

Exactly.  Flag & Pennant, and then we'll see.  Proactive action required:  ask the guy next to you "now what?".

[expat_panama]

a gret big ole TOLDJASO...

Hey, pundits get paid big bucks to say that after every big move, which is probably why we hear it so much on these threads.  .

[expat_panama]

Have a good one! Mrs. Expat & I like visiting Panama City too, only the one further south tho.