If you’ve had success trading ETF’s (Exchange Traded Funds), then congratulations.
For the rest of you – who likely own ETF’s 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.
- They crash
- 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. He says to ETF manager “B” Hey, Louie! If you take my position in ___, I’ll take your position in ___.
Sounds harmless, right?
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.
Losses must eventually show up…and you’ll feel the effects at the worst possible time.
How do we know this?
We have dozens of articles about why we hate ETF’s (HERE) and why you should avoid most of them.
So, what’s the difference between Guns and ETF’s?
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.
Learn more from our X-Perience Files (HERE).
P.S. “A man with an experience is NEVER at the mercy of a man with a theory.”
P.P.S. Remember, our newsletter prices go up on August 15th.