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Donna Hanley
3:12
Any predictions re this weekend’s Berkshire Hathaway meeting? And since the co. always has such reliable earnings potential, why has it so long underperformed the market?
P.S. I just noticed we can now live-stream the Berkshire Hathaway meeting. How long has this been the case, do you konw?
Dave Nadig
3:12
So, Mr. Buffett has been pretty clear that even HE thinks Berkshire wont beat the broad market reliably any more.
3:13
So much so that he's unwound the old restrictions on share buy backs.  To me it feels like hes sort of winding it all down.
As to why he's underperformed since the financial crisis: hes mostly avoided tech, and thats been a huge performance driver.
Yes, he now has a large apple position, but he was late there too.
(As for live streaming, I think it was 2017 that I first saw the stream).
3:14
But long story short: long term stock picking is really hard, and markets have gotten really really efficient at pricing in information.
So Buffett's "edge" has eroded as markets get better.
Just my theory.
Chucky
3:14
Do you use a financial adviser?  You are certainly an ETF expert but you also have said you don't invest in ETFs because of conflict on interest with your job.
Dave Nadig
3:15
I do not use a financial advisor.  I do however talk to a LOT of financial advisors.  I actually don't think a day goes by I don't talk to someone who has an RIA shingle out somewhere.
And I for sure tap those folks for info and advice.  So I guess that makes me a freeloader?
But fundamentally, I'm a pretty boring customer for an FA.  I supposed I could use a robo, but inertia is a hell of a drug.
Todd Rosenbluth - CFRA Research
3:16
Hi Dave. While most ETF expense ratios are steady or go down, in latest ETF Watch https://www.etf.com/sections/daily-etf-watch/volatility-etns-change-ti... included some like EGPT and SCIF where fees went up. Do you think this happens more than investors realize?
Dave Nadig
3:16
So most funds fall into one of two buckets (either mutual funds or ETFs).
Capped funds, where the ER is essentially just a persistent cap.
And un-capped funds, where the advertised ER is actually a forecast of the coming years actual expenses.
3:17
Uncapped funds go up and down CONSTANTLY
Vanguard does this it seems like monthly, tweaking the ER to recognize economies of scale
but if money doesnt flow IN to a fund, but instead flows OUT, the ER can sneak back up.
3:18
For a while, iShares used to display TWO expense ratios
for some funds.  One that was backwards looking, and one that was forward looking
I haven't seen that for a while though.
3:19
So yes, it happens quite a lot, but its usually a basis point or two, for uncapped funds.
Leila
3:19
Hello Dave: Is a stable economy necessarily better (overrated?) for ETFs’ performance, or can volatility be just as impacting a factor, depending on how you play it?
Dave Nadig
3:19
So, remember, ETFs aren't an asset class -- the're just a wrapper.
3:20
So a stable, low-growth economy might be great for, say, a Utilities of Financial sector stock, or even for stocks as a whole.
But it could be awful for, say, Gold ETFs, which tend to do well when people are panicky.
And of course, there ETFs that specifically target volatility, and those respond as youd expect.
(and there are inverse versions of all of these too!).
3:21
So too broad a brush, with 2200 funds on the market, to say that something is good for "ETFs" as a whole, performance wise.
OK, last question!
James
3:21
I saw the article about ETF "HeartBeat" trades and how it helps Vanguard funds?  Since you wrote a bit about the last article -- anything jump out at you on this new one?
Dave Nadig
3:21
OK, so this is probably from this article that hit the wire today:
Which connects the dots on two different things.
3:22
The first is just the idea of heartbeat trades, which we've covered a lot:
But briefly - ETFs using creation/redemption to minimize capital gains distributions by doing large trades around index reconstitutions or reballances.
Connecting…