Greenberg: How Social, Cloud ETFs Defied Skeptics
By: Herb Greenberg | 10/21/13 - 10:18 AM EDT
NEW YORK (TheStreet
) -- Proof that there are exceptions to every rule: The Global-X Social Media ETF (SOCL)
When it was first rolled out in late 2011, I was among the very first (I'm now not proud to say) to mock
Historically, sector mutual funds had a tendency to arrive late in a trend. They often signaled the top. As I wrote
at the time, "What always after the fact?"
And the social media ETF wasn't the only one to have a joke on me. Also check out the First Trust ISE Cloud Computing Index (SKYY)
, which I also rolled my eyes at in that story.
Beyond the historic top-ticking of sector funds, there was reason to be leery and (for skeptics) even embolden: For more than a year the social media fund looked like a loser. Zynga (ZNGA)
didn't help. But then the likes of Facebook (FB)
, Pandora (P)
and LinkedIn (LNKD)
spiced things up. On Deck: Twitter
And over on the cloud side - cloud computing has been the story. The only surprise is that its biggest holding is Facebook, not Salesforce.com (CRM)
, which ranks fourth among its holdings.
Facebook? As a cloud play? Really?
Turns out anything and everything can be a cloud play. Its holdings include Microsoft (P)
, Hewlett Packard (HPQ)
and Apple (AAPL)
According to the fund's fine print
, "a security must be engaged in a business activity supporting or utilizing
the cloud computing space."
Well, "utilizing" means every
None of these quibbles matter. The social fund was launched long before Facebook's IPO, Facebook's ability to show mobile growth and Twitter's announced IPO; in retrospect giving it a long runway -- long before "social" as a faddish investment theme peaks. (Don't get me wrong: Social is not going away, but after a while themes like these become mainstream.) As for the cloud fund, Facebook is hardly a "cloud" play, yet it leads an index that should be weighted more to Salesforce. All of which is the ultimate reminder: In this market the tide lifts all stocks. Just remember: The tide can go out as it can go in.
--Written by Herb Greenberg.