ETF

Am I Wrong About ETFs Being “Financial WMDs”? Goldman Says “Probably”

"If investors in these vehicles seek to withdraw at the first sign of trouble, then this demandable equity will have the same fire-sale-generating properties as short-term debt.”

"If investors in these vehicles seek to withdraw at the first sign of trouble, then this demandable equity will have the same fire-sale-generating properties as short-term debt.”
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5 comments on “Am I Wrong About ETFs Being “Financial WMDs”? Goldman Says “Probably”

  1. ShockedToFindGambling

    Maybe, but futures a lot more leveraged than ETFs.

  2. Curt Tyner

    “I love the smell of napalm in the morning”, what could possibly go wrong.

  3. David Marilley

    It would be biased, or even naiive to say Goldman is vacating because they have specific knowledge of impending liquidation problems. But clearly, Goldman is aware of the risk. And it seems that Goldman knows it would be naiive to maintain an imputed backstop liquidity role. A real cynic would say Goldman knows just how to attack these markets and force liquidation downdrafts, or the reverse in a way that allows the firm to profit, especially if they have reliable valuation models. You wouldn’t want to try that as a maker would you?

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