ETFs are big business and over the last two decades or so, they have mushroomed from providing low-cost core investments into extremely niche trading vehicles.
Reminds me of that apocryphal story of the dentist who finally has enough money to "play the market". His stockbroker gives him a tip on a small cap that "looks like it's starting to move". The dentist says "I want to be conservative and slowly average into the position". Sure enough, each time after he buys a small block, the stock price rises, seemingly validating the broker’s advice. After a few months, the dentist finally says "I want to be conservative, not get greedy, and remain diciplined, so please sell all my shares."
Just to clarify which part of small cap territory do you see bubbles while the overall small cap PE is way below SP500. The gene editing ETF is also 1/3 of its peak.
I didn't say that there are bubble in small caps at the moment. I just said that small caps are more prone to bubbles because they are less liquid and, well, smaller. If there is a bubble somewhere, I would say it is in AI investments and crypto.
(1) IPRV which holds stocks in cos which start & manage Private Equity eg KKR. It has made me money.
(2) SPAG which holds stocks in cos linked to farming & more eg Archer Daniels. This has lost me money. I continue to hold as climate change etc will mean we need new, more efficient, ways to grow food.
(3) IESU which holds stocks in large US oil producers. It does not hold BP & Shell which IMO will not do as well. Along with MLPP holding O&G is a good bet that ‘greening’ will take a long time.
JK is correct that we should be careful with thematics. They are secondary holdings for the PI.
I think bubbles are great. They take money from suckers and channel capital to things that wouldn't normally be built, like railroads or Amazon.com. They wash out scumbag finance guys like Madoff or Bankman-Fried who otherwise could continue under the radar for decades. There's a lot of wealth-building and creative destruction going on under the hood of a bubble. The only thing I dislike about the A.I. "bubble" is that it hasn't grown quickly or speculatively enough to really warrant the label. And as to the smallcap biotech firms... if they get more capital than they know how to burn, then more power to them.
Are these 'diworsified' ETFs any different from the 'diworsified' mutual funds that have been around for a long time? Over a longer time span, is the effect on the market due to these ETFs different because they can betraded often?
Echoes the history of illiquid actively managed or benchmark shadowing (depending on the flavor) collective investment schemes investing in either liquid or indeed illiquid (ie illiquid to nth degree) securities.
Reminds me of that apocryphal story of the dentist who finally has enough money to "play the market". His stockbroker gives him a tip on a small cap that "looks like it's starting to move". The dentist says "I want to be conservative and slowly average into the position". Sure enough, each time after he buys a small block, the stock price rises, seemingly validating the broker’s advice. After a few months, the dentist finally says "I want to be conservative, not get greedy, and remain diciplined, so please sell all my shares."
The stockbroker replies "Sell? To whom?"
Just to clarify which part of small cap territory do you see bubbles while the overall small cap PE is way below SP500. The gene editing ETF is also 1/3 of its peak.
I didn't say that there are bubble in small caps at the moment. I just said that small caps are more prone to bubbles because they are less liquid and, well, smaller. If there is a bubble somewhere, I would say it is in AI investments and crypto.
headline: 'Crypto miners double down on AI hosting.'
I'm in a bubble machine! :)
I hold 3 such thematic ETFs.
(1) IPRV which holds stocks in cos which start & manage Private Equity eg KKR. It has made me money.
(2) SPAG which holds stocks in cos linked to farming & more eg Archer Daniels. This has lost me money. I continue to hold as climate change etc will mean we need new, more efficient, ways to grow food.
(3) IESU which holds stocks in large US oil producers. It does not hold BP & Shell which IMO will not do as well. Along with MLPP holding O&G is a good bet that ‘greening’ will take a long time.
JK is correct that we should be careful with thematics. They are secondary holdings for the PI.
I think bubbles are great. They take money from suckers and channel capital to things that wouldn't normally be built, like railroads or Amazon.com. They wash out scumbag finance guys like Madoff or Bankman-Fried who otherwise could continue under the radar for decades. There's a lot of wealth-building and creative destruction going on under the hood of a bubble. The only thing I dislike about the A.I. "bubble" is that it hasn't grown quickly or speculatively enough to really warrant the label. And as to the smallcap biotech firms... if they get more capital than they know how to burn, then more power to them.
eventually there will be a direct correlation between AI and biotech. Do you agree?
interesting thought! Perhaps biotech is more reliant on government sponsorship?
Are these 'diworsified' ETFs any different from the 'diworsified' mutual funds that have been around for a long time? Over a longer time span, is the effect on the market due to these ETFs different because they can betraded often?
I think they are worse because they are so easy to trade. They can be sold intraday and many retail investors use them for day trading.
Echoes the history of illiquid actively managed or benchmark shadowing (depending on the flavor) collective investment schemes investing in either liquid or indeed illiquid (ie illiquid to nth degree) securities.