Welcome to GetFinancialInfo.Com! You are here: Home | Startups |

Today is:

# Ishares and ETFs: Pushing the DJIA Toward the Cliff

But let's not dwell upon the three or more levels of speculation that are the very foundation of all index funds. Let's move on to the two basic ideas that led to the development of plain vanilla Mutual Funds in the first place: diversification and professional management. Mutual Funds were a monumental breakthrough that changed the Investment World. Hands on investing (without the self-centered assistance of the banks and insurance companies) became possible for absolutely everyone. Self directed retirement programs and cheap to administer employee benefit programs became doable. The investment markets, once the domain of an elite group of wealthy entrepreneurs, became the savings accounts of choice for the employed masses. But only because the Funds were relatively safe with their guarantees of diversification and professional management! ETFs are just not the answer to the problems we've experienced lately with traditional Mutual Funds. (Those problems are a function of Fund Manager Compensation, conflicts of interest within Fund Sponsor Organizations, the delivery and pricing system for the funds, and believe it or don't, the self directed retirement programs themselves.)
Here's a thumbnail sketch of how well the major Passively Managed Indices have done since the turn of the century: For those six years, the DJIA growth rate averaged Zero % per year, the S & P 500 averaged Minus 2% per year, and the NASDAQ Composite averaged Minus 8% per year! How many positive sectors, technologies, commodities, or capitalization categories could there have been? Go ahead, add in 1999 just to make yourself feel better and you'll come up with 2% per year for the DJIA, Zero % annually for the S & P, and a stellar -1.5% per year for the NASDAQ. Now subtract the fees... hmmmm. Again, how would those ishares have fared? Hey, when you buy cheap and easy, it's usually worth it. Now if you want performance, I suggest you try management. Any management is better than no management, so long as you are receptive to the strategies or disciplines employed by the manager. If you can't understand or accept the strategy, don't hire the manager. During the past six years, there have been more advancing issues than declining ones on the NYSE, more stocks achieving new highs than new lows. Why did you lose money?
Sure, you might find some smiles in an ishare or two, particularly if you have the courage to take your profits, and there may be times when it makes good business sense to use these products as a hedge against a specific risk. But please, stop kidding yourself every time Wall Street comes up with a new short cut to investment success. Don't underestimate the value of experienced management, even if you have to pay a little extra for it. Actually, there is no reason why you (and I mean every one of you) can't learn either to run your own investment portfolio, or to instruct someone how you want it done. Every guess, every estimate, every hedge, and every shortcut increases risk, because none of the crystal balls used by those creative product hucksters works very well over the long haul. Products and gimmicks are never the answer. ETFs, a combination of the two, don't even address the question properly... AND their rising popularity has raised the risk level throughout the Stock Market. How's that, you ask? The demand for DJIA stocks included in ETFs is raising their prices to levels that have nothing to do with company fundamentals.

# Relative Articles

- Angel Startups are the best way to make your
- How to have lenders and investors eating out
- Overcoming Fear of Startup
- 8-Step Basic Goal Achievement Theory
- The Ways Making Real Money Online
- Critical illness insurance quotes
- Critical Illness: The Answer is Medical Insur
- American Express International Healthcare Pla
- Life Insurance:A Must In Today's Times
- Mortgage payment protection insurance

# Bookmarks

del.icio.us

Digg

Facebook

Newsvine

Reddit

Stumbleupon

Technorati

# SERVICES

- Mortgage
- Loans
- Banking & Credit
- Investing
- Financial Planning
- Insurance
- Taxes
- Accounting
- Bankruptcy
- Business
- Buy to Let
- Legal
- Money
- Retirement
- Sales & Marketing

- Retirement Pension To Small?
- Five-Steps to Successfully Monitoring 401k In
- Retirement Can Be More Rewarding If You Plan
- Tax Credits for Retirement Savings
- It is fun to crack a joke regarding old age a
- Pensions - Goverment Action Required
- Seven Illusions, Delusions
- The Keys to a Happy Retirement

- Why Take a Critical Illness Insurance Policy
- Medical Insurance: The Need of Modern Times
- Mortgage payment protection insurance
- Life Insurance:A Must In Today's Times
- American Express International Healthcare Pla
- Critical Illness: The Answer is Medical Insur
- Critical illness insurance quotes
- The Ways Making Real Money Online

Copyright 2008 GetFinancialInfo.Com