ETFs Vs Stocks

Let’s compare investing in ETFs vs Stocks.

According to the Dow Jones U.S. Market Index (DWCF an index that represents the top 95% of the U.S. stock market based on market capitalization) – the index includes about 3,741 stocks that trade on the U.S. stock exchanges.

Compare that to the 7,600+ Exchange Traded Funds (ETFs).

Wait, What?

Yes, you read that right.  The Number of ETFs on the exchanges is more than double the number of individual stocks.

Sorry, but this is another reason why we have written the “Why We Hate ETFs” emails (HERE).

Let me explain…

There are twice as many ETFs out there as there are available stocks.

And they all boast about how they the best way for you to diversify your holdings.

ETFs Vs Stocks

One of the most obvious culprits of this false claim is from none other than everyone’s favorite old Uncle Warren Buffet who said the small investor should buy an S&P index fund for diversification.

Ironically (or NOT) hypocrite Buffet made his fortune on individual stocks and NOT on ETFs.

It’s hard not to laugh at these claims when you apply some simple math.

To prove a point, let’s use oil companies as an example to illustrate some faults.

• If you assume there are 100 Major Oil Companies (There’s nowhere near 100 majors) and you have 7,600 ETFs that could possibly buy them, don’t you think there’s a great chance of “overlapping?” (owning the same stock in more than one fund)
• The top ten holdings in most ETF’s usually make up less than 25% of the total fund.
• That means that even if one of the funds stocks goes up 20% in one day, you still won’t see your fund go up very much.
• When you have 7,600 fund managers chasing the same 3,741 stocks (most of which don’t qualify to belong in many ETF’s) you increase the chances of a panic.
• And, if everyone wants to sell the same stock who will be the buyer…and at what price?

Are you starting to see how complicated this can be?

And who do you think gets the short end of the stick when the markets crash?

Stop being victimized by these Wall Street thieves.

Learn more about why you should own individual stocks (HERE).

Share the with a friend…especially if they are loaded up on ETFs.  They’ll thank YOU later.

And tell them:

We’re Not Just About Finance

But we use finance to give you hope.

“And you shall know the truth, and the truth shall make you free.”

~John 8:32~