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Dave Nadig
2:26
I could pretend and go google it, but where would the fun in that be.  I'll go do that after this chat (as will you I'm sure!) but I'm going to GUESS it has something to do with how dividends are distributed.
OK, last question for the day:
Esme Gonzalez
2:26
When I consider what potential asset classes I might want ETF exposure to, I’m wondering what makes an entire asset class go up or down; because it seems like things happen to specific companies, not asset classes as a whole. Thoughts?
Dave Nadig
2:26
This is actually a really good question.
2:27
So, broadly speaking, Macro Economic factors tend to make whole kinds of investments more or less attractive.
So lets take a simple example:  Iran decides to try and block the straights of hormuz.
THat's a big, macro, exogenous event.
2:28
The impacts initially are pretty simple: less oil moving out of the gulf, oil prices would go up.
But then investors and traders will immediately try and assess "who wins who loses."
So you might see a whole range of companies immediately trade higher and lower based on their exposure to the price of oil.
2:29
For instance, you could see airline stocks all get hit -- the price of petroleum is a big cost for them.
If you pull even further back, to something like interest rates:
2:30
Lets say the return of the 10 year bond goes up 1% ... well, now those bonds, which are risk free, are more attractive, so investors will take their money from other assets to buy bonds.
So you'd expect equities -- the whole asset class -- to trade down.
This is why the Fed is in the news every day.
Every asset class tends to have these big externalities that can push prices of all the securities in the asset class around.
2:31
and from THAT baseline, things like individual earnings will move the prices of companies around.
OK, that's it for me today.  Thanks for the great questions as always, and we'll see you next week!
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