The Difference Between Guns and ETF’s is…

Not too many people will make a comparison between ETF’s (Exchange Traded Funds) and guns.

But, as you probably know, we’re not your normal financial publication.

And we’re not just about finance.

But let’s just say that if you’ve had success trading ETFs, then congratulations.

For the rest of you – who likely own ETFs in your 401k – consider this email a wake-up call.

I say this because you are probably unaware of the two biggest problems with owning ETF’s when the markets crash.

1. They crash harder.
2. They become illiquid.

Translation:  The only buyer for your ETF will be the fund itself.

Of course, they’ll give you the highest price possible…LOL!

You see most ETF and/or mutual fund managers are joined together at the hip.  They often trade among themselves without going to the open markets.

Example:  ETF manager “A” is sitting on some big losses and doesn’t want to dump them in the open market…causing even more losses.

So, he says to ETF manager “B” Hey, Louie! If you take my position in ___, I’ll take your position in ___.

Sounds harmless, right?

Wrong!

What they won’t tell you is when they CAN’T sell certain Illiquid stocks, they’ll bury the trade within their own family of funds.

Later on (when the markets are moving up) your ETF will surprisingly go down.

Why?

Losses must eventually show up…and you’ll feel the effects at the worst possible time.

How do we know this?

One word…EXPERIENCE.

Between Guns and ETFs

We have dozens of articles about why we hate ETFs (HERE) and why you should avoid most of them.

So, what’s the difference between Guns and ETFs?

Guns can kill you with one shot.

ETF’s can take months or years to kill you.

It’s chronic rather than acute.  Kinda like getting stabbed to death with a spoon.

Be sure to read: Why Your ETFs (and mutual funds) Are More Vulnerable to Big Market Declines in our upcoming December newsletter (HERE).

And share this with a friend…especially if they own ETF’s.

They’ll thank You Later.

Remember We’re Not Just About Finance.

https://www.financialsmatter.com/connecting-the-dots/

P.S. “A man with an experience is NEVER at the mercy of a man with a theory.”

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