Jack Bogle: Beware The Meteoric Rise Of ETFs

Jack Bogle: Beware The Meteoric Rise Of ETFs

You know, ETFs aren't as safe as they may seem. This became readily apparent in 2015 when Reuters reported - in a piece that was largely ignored - that some of the top ETF providers were seeking to secure lines of credit that would be available in the event liquidity became a problem. The issue still isn't well understood. For something like a high yield bond ETF, the underlying securities aren't liquid. The ETF units are, but only because the flows are still diversifiable. That just means tha
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2 thoughts on “Jack Bogle: Beware The Meteoric Rise Of ETFs

  1. Excellent observations. Etfs are merely another financial weapon of mass destruction, to borrow from Warren Buffet, and Paul Volker is still right: The financial industry has grown from five to twenty percent of GDP and we have only ATM machines to show for it. Perhaps he exaggerated; we also have $225 Trillion of global debt to show for it.
    And Bogle is also still right in his assertion that the investor gets about 1/4th of market returns over time. Then, financial services gets 1/4th “managing ” his money and goading him to trade and “advising” how to do it. The tax man gets 1/4th and has an obvious vested interest in high turnover. Buying high and selling low, slippage, etc. gets the other 1/4th.
    Watching it all leaves me feeling like a teetotaler at a roaring drunk party. I don’t think I’m alone, but I also no longer even care if I am.

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