This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

'Barron's' ETF Special Report Misses the Mark

NEW YORK ( TheStreet) -- This weekend Barron's ran several articles that combined to make an ETF special report, but there were gaps in some of the ideas expressed that should be clarified to promote better understanding of the product.

In an article titled "No Magic Solution Here," Barron's said that the ETF industry was "jumping the shark" with the proposed Bitcoin ETF that the Winklevoss twins are trying to launch. "Jumping the shark" refers to an episode of the 1970s television Happy Days when Fonzie jumped over a shark tank on water skis. The term has become synonomous with being gimmicky.

Although there aren't too many people who will make an investment case for Bitcoins, Barron's suggested that because they have little or no investment merit, an ETF based on them shouldn't trade. This is misguided.

Segments of the capital market can be investment-worthy, such as blue-chip stocks; worthy of speculation, such as options purchased shortly before expiration but ahead of an earnings report; or both, such as the SPDR S&P 500 (SPY), an index ETF held as a long-term investment and used in many short-term speculative strategies.

As Barron's points out, Bitcoins are a virtual currency. They came into existence in 2008 and can be transferred without a financial institution acting as an intermediary. The Bitcoin's value can and does fluctuate against other currencies including the dollar, and at times has been very volatile. In the last two months the Bitcoin is down by about one-third against the greenback.

Whether there is any value as an investment, there is volatility, and people like to speculate on volatile trading instruments. This is true of the various ETFs and ETNs that track the CBOE Volatility Index in one form or another.

The iPath S&P 500 VIX Short Term Futures ETN (VXX) is down 96% since its inception, which did not stop it from trading 29 million shares on Friday or 30 million shares the day before.

Something built for speculation, like a Bitcoin ETF, will either find a trading audience and succeed or will fail to do so, close and cost its backers their investment in starting up the fund.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
EDEN $56.16 -0.62%
VXX $16.71 -0.12%
NVO $53.54 -0.46%
AAPL $93.24 -0.41%
FB $117.81 -0.21%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs