Lee Kranefuss from iShares and Jack Bogle just sort of had it out over whether ETFs are a good thing or not.
Mr. Bogle made a great point in between incorrectly giving some facts about turnover and such. He said that the investor is his own worst enemy, chasing hot returns from things like foreign ETFs and he thinks investors might get hurt because of it.
While it is a great point I think it addresses the wrong argument. Seems to me people chase hot returns in OEFs, common stocks and anything else that might exist including ETFs.
Does he think shuttering ETFs will forever put an end to poor investment decisions?
The likelihood that you or I will need the livestock ETF is quite low. But I don't think there is a reasonable argument that such a thing should not exist, primarily marketed to professional investors. If it turns out that there is no interest in the livestock ETF they'll close it. While it would be easy to lose money in the livestock ETF it would be difficult for it to go to zero, Worldcom and Enron showed us that big "safe" stocks however can go to zero.
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6 comments:
I did not hear Mr. Bogle complaining wheh all of America bought into his S&P500 index fund from 1995 to 2000. EVERYBODY. Remember? Up over 20% for 5yrs straight. Did he complain that people may get hurt. NO!
....and yet...the S&P500 spent the next 5yrs ---going NOWHERE. People did get hurt from his index investment because he made people believe that it was "The Way". If they had only had an exposure to.....foreign stocks and small cap value.....ho hum.
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Look another ETF article. What a joke.
In fairness, Bogle did switch from recomending the S&P 500 to the total market index fund a number of years ago. Additionally he has recommened some foreign holdings. I just forget the funds and percentages, but I would bet he recommended an index fund.
Bogle simply does not believe the vast majority of people can beat indexing and he is generally correct. From my perspective Bogle is a outstanding individual giving much better advice than your average Broker etc.
I did catch that segment on CNBC.Bogle is a legend.Never debate with a legend.It's akin to getting into a pissing match with a skunk.
Bogle has done wonderful things for the industry but he has a very narrow view of indexing and diversification. He has a clear bias for large, U.S., and growth stocks - brushing off the historical performance of other asset classes.
If you ask me, actively managed mutual funds (the vast majority underperforming the S&P 500) are a far greater danger to most investor's wallets than the ETFs are.
mostly great comments; T the skunk line is hysterical. I may use but I'll be sure to foot note you.
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