Enough with the ETFs already.
Today's announcement that Claymore Group is launching an exchange-traded fund (ETF) to track stocks with little or no coverage is just the latest in the out-of-control creation of ETFs that's been going on lately. Claymore's also trying to launch an ETF made up of companies where there has been insider buying.
I am not against indexing per se. But these instruments are now taking on all aspects of stupidity. The idea of picking undercovered companies and buying them makes no sense at all. The idea of buying good undercovered companies makes sense. The idea of buying companies where there is insider buying makes no sense. The idea of buying good companies where there is insider buying, well that I can get with.
The proliferation of ETFs has gotten so out of control that I would not be surprised to see an ETF of all ETFs. Or a best-of-ETFs ETF. Or a worst-of-ETFs ETF for those who want to bet that the ugly ducklings are going to become swans. How about an ETF that buys high-performing ETFs and shorts poor-performing ETFs?How about an ETF that just owns stocks that start with the letter P? All of these ETFs just serve to confuse people and fake them out of diversifying. The reason I like mutual funds is because they take a diversified approach and allow you to be cushioned against a market decline. Diversification, as I say over and over in
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