People have gotten so used to immediate rescues off any drop that holding a floor for two days brings out the doomsayers.
I remember a time, many years ago, where we could go a whole week without the Dow moving 100 points – TOTAL! I know that sounds like it must have been back before the Internet or even electricity but really, even between 2005 and 2007, the VIX averaged 12 – less than half of where it is today and, pre-1997, that was about the norm for the market. Back in those days, we used to buy stocks because we thought the company would grow and we wouldn’t hide in ETF “baskets” where we buy every single stock in a sector, as if quality was meaningless and the entire market would trade as a block.
Sadly, ETF funds (according to Blackrock) have now hit $1.032 TRILLION at the end of 2009 and that figure is up 45% for the year! That’s right, since their inception, we put about $700Bn into ETFs but, last year, another $300Bn was plowed in – mostly into new commodity ETFs (which creates a very false demand but is self-fulfilling at first). US ETFs account for $706Bn while Europe has $224Bn so imagine how far we can pump up Asia and other emerging markets if we can convince the sheeple to “diversify” over there! And ETFs have plenty of room to grow as BlackRock has done an excellent job of promoting them as a way to “take control of your Investments” as they look to capture more of the $19Tn mutual fund market.
Hedge funds make up just $1.5Tn of the investment money and, as a Hedge Fund manager, I can tell you we could not be more thrilled to see more and more money going into index and commodity funds that BUYBUYBUY and SELLSELLSELL based on rules I can read about in the prospectus. You, the ETF investor are playing a game where your money will be put to work at a certain time and under certain conditions every day and I, the Hedge fund manager, can read your entire playbook and can make my bets ahead of you any time I choose and, even if you see me betting, you still can’t change because you (your ETF) still have to follow your rules.
Now we have launches of CRBA, CRBQ and CRBI ETFs, even MORE ways to pile money into commodities – this following closely on…
