Watch Out for ETF Misinformation

I'm glad to share the job of helping you make sense of investing in exchange-traded funds, a mission made more necessary by the increasing interest and investment in these products. But I get concerned when I spot articles like the one I read over the long weekend.

I came across "You Might Be Surprised by What's in Your ETF" on SmartMoney.com, and I was negatively surprised by it, to put it mildly. While I do agree with the article's main thrust -- "know what you are holding" -- I believe the bulk of the piece's analysis revealed a fundamental lack of understanding of the product and even of the importance of forward-looking analysis.

Slippage on Oil ETF

The piece starts with a dissection of the United States Oil Fund(USO Quote) that quickly goes off-point. Pointing out that USO doesn't own oil stocks and instead tracks West Texas intermediate crude, the author does well to emphasize that if you don't know what WTIC is, you shouldn't buy USO. He goes awry when he adds that you probably wouldn't want to buy it because it's down 32%. ...