360 Degrees: Are ETFs for You?

Editor's Note: In this edition of "360 Degrees," RealMoney commentators take a look at the proliferation of exchange-traded funds. Are they just another way for Wall Street to suck fees out of investors? How can investors best use them?

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ETF Overload, by Jim Cramer

This column was originally published on RealMoney on July 12 at 8:47 a.m. EDT.

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?

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