There's No Such Thing as an ETF Bubble

BOSTON (TheStreet) -- TheStreet.com recently published a guest article by an anonymous blogger from a site called YieldPig asking the rhetorical question of whether exchange traded funds are "the next bubble."

Bubbles are all-encompassing events that leave much damage in their wake. The tech-wreck bubble 10 years ago was a major catalyst in driving the stock market down 50% and causing ripple effects. The contributing factors that caused housing to implode in the past couple of years, again, were catalysts for the stock market falling by half. We're still trying to sort out the consequences yet to come.

About a year and half ago, I was on The Closing Bell on CNBC and was asked whether solar stocks were a bubble. That was when crude oil was close to its high, and solar stocks were popular and doing well. Solar stocks weren't considered a bubble. Not everything that goes up in price, only to plummet, is a bubble. The Market Vectors Solar Energy ETF(KWT) had a market value of less than $100 billion. During the tech wreck, we had dozens of stocks with no earnings with market caps greater than $100 billion -- does anyone remember Commerce One or Ariba? The difference is that one was an industry, solar, and the others are companies. Maybe solar was a mania but most definitely not a bubble.