Greenberg: How Social, Cloud ETFs Defied Skeptics

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 it.

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 company.

Reality: 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.

Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security.