Jim Cramer had a video the other day saying, well you can see from the image what it said. I wrote an article taking the other side of Jim's argument and this is what they put on the site.Hearty chuckle.
Wikinvest Wire
Thursday, February 08, 2007
Too Funny!
Jim Cramer had a video the other day saying, well you can see from the image what it said. I wrote an article taking the other side of Jim's argument and this is what they put on the site.Hearty chuckle.
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4 comments:
He doesn't really understand ETFs, does he?
Cramer doesn't like either index funds or ETF's because they are not all what he calls "best of breed."
But that's why he still likes managed funds like Contra Fund from Fidelity since he thinks that manager will almost always pick the best stocks for their funds. But the managed funds don't beat the index funds, and their expense ratios are higher as well. And ETF's can be traded like stocks during the trading day. Not at the end of the trading day.
I can also put stop loss trades on my ETF's. (And I have them on most of mine right now)
As a relatively short-horizon trader, I use ETFs all the time. They are a great way to quickly capture a trend or a rotation without having to spend time researching indiv componentry or picking the wrong one or two stocks in a sector.
You won't hit any home runs with ETFs, but I'm not looking for home runs.
That said, some ETFs are better than others at representing a sector. In the semi area, for eg, the SMH is a poor proxy since just four names comprise over 50% of the ETF. And the other semi ETFs have no trading volume.
Other ETFs, like the IBB for biotech, are very broad. But the IBB has been in a range for years while many of its sector components have done brilliantly while others are in the tank.
So you have to choose wisely and know what you're playing and why.
I also use ETFs a great deal during earnings season, since I am loathe to play indiv stocks into earnings given the prediliction of Cheat Streeters to slam or spike stocks dramatically after reporting. ETFs are lower-risk and far less prone to sudden spikes or selloffs.
Some prefer the wild volatility of indiv stocks and the ability to hit 10-baggers and so forth. I'd rather play larger positions with less-volatile vehicles. And ETFs fit that bill nicely.
Everyone loves controversy....except the people involved in it :)
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