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March 3, 2024

Financials Matter

"It's Not Just About Finance"

Why I Don’t do ETF’s

 

To many investors, ETF’s (Exchange Traded Funds) are the best thing since sliced bread.

So, let me apologize in advance while I slaughter these “sacred cows.”

In case you’re wondering, I’m fully aware that ETF’s:

  • Make up a huge part of the market
  • Allow you to “diversify your portfolio”
  • Have lower fees than mutual funds
  • Give you 2X, 3X, even 4X leverage on certain stocks

 

What’s not to like about that?

Don’t get me wrong.  There are some good ETF’s out there.

But do you think they’re giving you such low fees because they like you?

Try reading their entire prospectus before answering that question.

Many use a “holding company” to purchase securities.  They’ll claim it’s for “legal reasons” or to “protect the investor.”

Protect from what?

I’m not kidding when I tell you that they purchase stocks for the holding company at (let’s say) $1.00.  Then they sell it to the ETF for $1.05.  That’s a cool 5% mark-up.

Wait!  Is that legal?

You THINK you’re only paying the 25 basis points (0.25) they boast about in their prospectus.  The reality is, you’re getting tagged with a huge premium that benefits THEM…not you.

What do you think the chances are they do it when they sell stocks in the same ETF?

See my point?

In the next issue of Simplifying Wall Street in Plain English, we show you how to beat the ETF cabal at their own game.

And we’ll also show you how to do it without paying outrageous fees.

But you must be a member (HERE) to get the goodies.

Go there now (HERE).

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