 | | Exchange-Traded Funds: The Good, the Bad and the Profitable | | Rob Morgan, Bond Strategist, The Oxford Club | The Stock of the Century - Buy This Stock RIGHT NOW!
What if you could buy one tiny stock today for $10 - at the center of a growing tech industry - that experts believe will explode a massive 77,400%? Wall Street legend Paul Mampilly recently identified this as the stock of the century. Buying up a handful of shares of this small company now could change your life and even make you millions. Click here now.
SPONSORED | | | I get a lot of questions from investors about exchange-traded funds, or ETFs. Many investors are curious about whether ETFs should have a place in their portfolios.
Perhaps the best place to start in this discussion is to define what an ETF is.
An ETF is a set of securities put together to track a certain index. One of the more popular ETFs, for example, was constructed to track the performance of the S&P 500. This is the SPDR S&P 500 ETF Trust (NYSE: SPY). | | | Prior to the creation of ETFs, it was very difficult for an individual investor to actually invest in an index - but now ETFs allow an investor to do exactly that. And even though an ETF is referred to as a fund, it trades like an individual security during the day.
In other words, unlike the holder of a mutual fund, the holder of an ETF doesn't need to wait until the end of a trading day to get the NAV (net asset value) and trade the ETF.
Sounds like the greatest thing since sliced bread, right? An investment with the diversification advantages of a fund, but with the ability to trade like an individual security during the day? What's not to like?
Not so fast...
The bull market in stocks will turn 11 years old in a few short weeks. And not coincidentally, the explosion in popularity of ETFs has coincided with the rise of that bull market. | | | Networks Are Trying to BAN Bill O'Reilly's Money Message One network actually told us that it will NOT run Bill O'Reilly's wealth-building message because of its "conservative nature"!
This is a conspiracy in plain sight.
Watch O'Reilly's money message NOW, before it gets pulled from the internet forever. | | | Eventually this business cycle will end, the bull market in stocks will end, and investors will experience a stock market pullback (correction of 10% or more) or an outright bear market (correction of 20% or more).
So how will ETFs react when the next stock market crash comes?
I suspect that investors may have a rude awakening concerning the liquidity of ETFs.
It will be hard enough to trade a large fund like the S&P 500 Trust, but with the myriad ETFs that have sprung up - particularly in emerging stock and bond markets - how will investors be able to exit ETFs where the underlying securities are thinly traded?
Good luck getting out of those when all the holders want to head for the exits...
But there is one area of the financial markets that ETFs have helped notably: the bond market. That's because many bonds - even those from well-known companies with large bond issues - don't trade frequently.
And prior to the advent of ETFs (particularly bond ETFs), these off-the-run bonds could be difficult to value, not to mention difficult to trade. Bond ETFs have made the bond market more liquid, even when the bonds making up the ETFs are not.
ETFs can make a difference for small investors, as well as for the broader market. And their growth shows that individual investors are very comfortable owning them.
But ETFs have not been tested in a market crash, and when all investors are headed for the exits - even in something like a regional crash in emerging markets where the ETFs are not very liquid to begin with - watch out...
And remember, for the most security, you can count on steadfast blue chip corporates.
Good investing,
Rob | | | | | | Have You Heard About the "Billionaire's Launch Pad"?
Most people don't know this...
But what we call the "Billionaire's Launch Pad" is one of the REAL ways wealthy people like Jeff Bezos, Bill Gates, Mark Zuckerberg and others have made their fortunes.
A video has just surfaced on the internet, revealing this launch pad.
Click here to watch it now. | | | | - More From Wealthy Retirement - | | | | | | | | | | | | | | | |
The Oxford Club is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. Members should be aware that although our track record is highly rated by an independent analysis and has been legally reviewed, investment markets have inherent risks and there can be no guarantee of future profits. The stated returns may also include option trades. 
No comments:
Post a Comment