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Dave Nadig
2:13
But you can also just take out an ad in the paper and call yourself one.
Of course, you could end up breaking all sorts of laws but you COULD do it.
So a CFP is worth looking for in your advisor.
2:14
Its worth noting that not every employee of a big advisory shop will be a CFP - often times there are folks who dont do the actual planning work with customers who may have different or no credentials.  You don't expect the receptionist, or the accountants, or the lawyers to, necessarily.
Cole H.
2:14
Hi Dave, in your opinion, is there one key thing ETF investors should be mindful of in volatile markets?
Dave Nadig
2:14
Yes.  In the immortal words of the Hitchhikers Guide to the Galaxy: don't panic.
2:15
It's very very rare that you can look back on someones portfolio and say "golly, if only this person had made more panic trades in the midst of it all, they'd be so much better off."
Overtrading is the issue, not undertrading.
Does that mean you should never ever react or sell a position? Of course not.  But a one or few day drawdown because of big, macro factors (which is the kind of Vol we've been seeing) should really be irrelevant if your a long term investor.
2:16
If anything, it just creates buying opportunities if your dollar cost averaging in.
2:17
I guess the second piece would be: if you *are* going to be trading in volatile markets, use good trading hygiene.  Use limit orders.  Have a sense of fair value.  Never leave a stop overnight.
Dana
2:17
Greetings Dave. Any secrets to a particular ETF issuer being more successful ($) than another? Or is it just hit and miss with each fund?
Dave Nadig
2:17
Hi Dana, so the short answer here is distribution.
2:18
In the old days, the conventional wisdom was that everything was about relative performance.  If you were the best performing fund in XYZ sector, you could count on flows, field of dreams style.
Its just no longer the case.  There are dozens of funds with really solid track records that haven't pulled in assets (Natixis' MVIN comes to mind) despite that.
2:19
So having a great story, a decent marketing budget, and a good sales force.  That's actually probably more important for the success of a fund than its raw construction.
Of course, as an investor, you should care exactly nothing for any of that.  You should look for funds that give you the exposure you want, at a price you think is reasonable, that trades reasonably well.
Avery
2:19
Hi Dave - thanks for your time... you've published a few articles recently on factor-based strategies (quality, min vol, etc). How important is sector neutrality when considering these types of strategies? Sector constraints appear to maintain diversification within a factor, but curious to hear your take. Thanks again.
Dave Nadig
2:20
So, the reality is that even the purest factor ETFs only get a small fraction of their active risk from the factor alone.
2:21
I just did a slide for a presentation where I looked at the most "valuey" value fund out there (I believe FTA was the winner when I ran it, from First Trust?)
And when you run that through a risk model like Bloomberg/Axioma/Barra, it turns out only 8% of its risk vs. benchmark comes from Value.  Most of it comes from Sector differences, or single stock exposure risks.
2:22
So by that measure, if what you're really tryign to do is get "the market with a factor tilt" then sector neutral is very very important.
However, that constraint can lead you to some pretty think portfolios, or some pretty diluted value exposure by itself.
2:23
put another way, if all the "value" stocks happen to be utilities, well, you're really limiting how much value your going to get. being sector neutral.  So its a trade off.
I think it's important to think of factors as "tweaks" not asset classes in themselves -- unless your doing them completely market neutral by going 100% short and 100% long.  Which no US ETFs do in the factor space (if I'm wrong, someone will remind me, but I'm pretty sure I'm right0.
Jim Garces
2:24
Too soon for the Oman tanker attacks to be having an effect on oil ETFs?
Dave Nadig
2:25
Im actually surprised how muted the reactions have been, honestly.
WTI did what, a pop from 51 to 53?
But yes, that pop was instantly reflected in the price of the ETFs like USO - it has to be, as thats what it owns.  WTI futures.
2:26
But I would caution against trying to "trade" big news like this
2:27
Big news gets priced in within seconds these days.  There are algos out there watching twitter and the AP news feed and everything else.
I suspect that there was a HUGE spike in trading within seconds of the first headline crossing the wire, entirely untouched by human hands
so these things get priced in far, far faster than any of us normal humans could imagine.
So the question is "what do you think you know that the market doesn't"
2:28
And if the answer is just that you have a hunch, well, thats fine, but recognize that that's no longer investing.  It's just speculation.
Grover Miller
2:28
Are there any ETF's that cover the LNG market? Like the LNG shippers ??
Dave Nadig
2:28
So the two ways I know of in ETFs to play this are either just buying natural gas itself, through a futures product like UNG
2:29
or through Master Limited Partnership ETFs, which own pipelines.  (AMLP, MLPX, etc).
those are really the cleanest plays
2:30
There is one specific ETF focusing on natural gas related equities however:
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