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Dave Nadig
2:59
Good afternoon, and welcome to the ETF.com Live session: Jack Bogle memorial edition.
3:00
You can ask questions below, and ill get to as many as I can in the next half hour or so.
We'll have a transcript up shortly after we're done.  With that, let's get started!!
SM
3:00
Most people are familiar with ETF benefits. In your opinion what are some of the biggest risks/problems associated with ETFs?
Dave Nadig
3:01
Excellent question.  I think the biggest "problem" with ETFs in 2019 is just the sheer variety.  There are SO MANY etfs to pick from.
While most of them have a reason for being -- they're right for someone -- obviously there are a lot of ETFs that just aren't right for some people, and it can be real work to tease that out.
3:02
I mean, just consider SPY (etf.com/spy) -- it has over 160 competitors!
160 funds playing in the large cap U.S. equity playground.
Now, there are some VERY cool funds in there, but there are also a lot of funds that have very specific use cases that aren't going to provide the same kind of returns as just boring old indexed large cap equities.
3:03
So I think the biggest issue is simply due diligence and choice.  Hopefully ETF.com helps there, but it's also a big reason some investors have turned to automated investment platforms (betterment, wealthfront and so on) or model portfolios.
Zeke
3:03
Had you met Jack Bogle?
Dave Nadig
3:03
Hi Zeke (and I'll roll a few Bogle-related questions in to this one:
Anon
3:03
So in light of Bogle passing: was his obsession with low cost investing always an endless good?  Is there such a thing as too low, or maybe too low to care?
Richard Martin
3:04
Was there ever a bigger luminary in this industry than Jack Bogle?
Dave Nadig
3:04
SO, short answer, I had met Mr. Bogle several times, but only really had one big long chat with him.  I wrote about it briefly today:
I saw a thread on twitter recently about "who's our next Bogle" in financial services.
3:05
And honestly< i really don't think we'll ever see one.
Not because he was a saint (despite his nickname) but because his solution -- a mutually-owned company dedicated to simplcity -- is something I have a very hard time imagining happening again in my lifetime.
3:06
And it's worth pointing out -- he was pretty controversial, and not just with Vanguard's competitors.
He was not actually a big supporter of ETFs.  He thought they encouraged people to trade, and really spent a lot of the end of his life being a thorn in the side of the industry -- including at Vanguard!
But that was Bogle -- never playing on anyone elses terms.
Elizabeth
3:06
Between the government shutdown and the Brexit vote failing, is there something I should be doing to my portfolio? Should I actively be trying to change positions at this time or should I just mimic "Saint Jack" and be boring and forget it?
Dave Nadig
3:07
Boy, that's tricky.  I mean, the default answer is that anything you do in RESPONSE to a big externality implies that you are faster/smarter than the market.
Consider the market moves originally around brexit.  If you, say, sold all your UK positions or shorted the pound or whatever 3 days after the vote, you were betting that everyone ELSE who was changing their positions had somehow done it wrong.
3:08
because if your a seller, you believe its going lower, and that the price you get today is somehow "wrong" and should be lower.
That's part of the core message from Bogle's legacy: you have to actually believe the market is wrong to be a price-setter.
Of course, MOST of the market is out there being price setters.
TraderJoe
3:09
I saw your webinar (part of it) on the new Direxion 150/50 ETFs.  Who are these things for? What do you really think of them, now that your not on the webinar with them?
Dave Nadig
3:09
Good segue question!
So, the funds we talked about we also wrote up here:
3:10
I think the funds are "clever" in that they take something investors have long done -- pairs trading -- and bake them into convenient packages.
I think there's something putting a product on the street that is a real "money where your mouth is" tool.
3:11
For instance -- if your an advisor who genuinely believes, for example, that Small Caps are what pull the market out of the slump, these are a REALLY interesting way of making that bet.
Sure, you could just buy iShares Russell 2000 ETF (etf.com/IWM), but these let you do that AND bet on the spread between small caps and large caps.
3:12
All in a beta 1 package that's not outrageoulsy expensive (around 50bps or less for most of them).
Would I like them more at half the price?  Grin.  Sure.
But I think they're actually useful innovations.
Tangent Style
3:12
Do you think there's any risk to the ETF wrapper tax advantage vs mutual fund? And is there any chance we see material ETF penetration of taxable retirement vehicles?
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