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Dave Nadig
3:28
a global trade war slows down GLOBAL GDP growth.
So, are the relative winners and losers?
Sure.
3:29
The most intriguing answer i've heard on this lately was from Tyler Mordy at Forstrong, who (paraphrasing a dinner conversation) said that China simply has more tools to win with than anyone else, so while it will hurt for a while, 10 years form now, China actually probably benefits more than it suffers.
3:30
But as for specific sectors and so on? I think it's a bit of a mugs game to try and second guess the market pricing in all this information -- and believe me, it prices it in, quickly and violently.
We've seen that through all the news flow here.
Blaine Rogers
3:30
Hello Dave, "Passive" vs "active" seems like a hot button, with folks strongly aligned on one side or the other. What's the bottom line on the difference: is "passive" basically just leaving your money in some "index" account, and "active" is having a money manager in charge of your portfolio and you pay higher fees for that, or ...?
Dave Nadig
3:31
Welcome to investment semantics 101: hair splitting.
In all seriousness, its a surprisingly reasonable question.
At the core, "passive" is about minimizing internal portfolio turnover and getting complete exposure to an asset class.
3:32
by that definition, we'd all just buy VT and go home.  But most folks don't. The average passive ETF investor probably owns 6-7 ETFs (there have been some surveys on this).
Those etfs might be 10bps and super passive, low turnover indexes, but if that investor decided that "40% in U.S. equity seems about right" - well, they just made an active decision about their asset allocation.
3:33
The definition really is always about where two alternatives sit on a spectrum.
Even the S&P 500 has a committee.  It's essentially long-term, slow, active management.
but compared to, say, Contrafund? It's very passive.
And contrafund compared to, say, a tactical hedge fund, would look pretty passive.
3:34
So the question you should always be asking is "vs. what alternative"
So this fund looks cheap -- compared to what?
This fund looks like it performed well -- compared to what?
This fund says it's got great dividend yield and low vol -- compared to what?
great question though.
3:35
OK, last question here.
Sammy C.
3:35
So if tarrifs are bad for everyone, is that the kind of thing that would "benefit" from a BlackSwan ETf?
Dave Nadig
3:35
Very broad question, but I like it.
We've got a variety of "black swan" style ETFs in registration - today Amplify just announced another one.
3:36
they all have some version of "get some upside, but minimize your crater risk" in them.  Essentially risk management.  Usually using options as a way to get the desired return patern.
The problem with those strategies isn't that they don't work -- I'm sure they will do what they say on the ingredient label -- it's that you never know how the future is going to actually pan out.
3:37
"bad for global GDP" doesn't mean, necessarily, a black swan event.  It could me low volatility 3% equity markets for 5 years.  It could mean high volatility mean reversion, with lots of stomach drops.
it could mean a long slow bear market
nobody actually "knows"
3:38
I mean, I know friends who went to cash when Trump was elected, and I know friends who doubled down and levered up.
both very smart.
So sure -- COULD one of the scenarios of a protracted trade war play right into the hands of a risk-managed strategy?  Absolutely.  Could such a strategy end up sacrificing upside? Of course. That's how they are designed.
3:39
OK folks, that's going to wrap for today.  Sorry I missed a few questions.
One note: our stock finder is up, and you can get there most easily by typing ETF.com/stock/ticker in your browser, like this: http://www.etf.com/stock/AAPL.
Hope you enjoy it.
See you next thursday!
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