Who Let the Dogs Out?

August 07, 2007

Matt - great feature article on ETNs. And I am shocked SHOCKED, that investors might actually have to have a decent investing option in their 401(k) options.

Did you read Matt's feature on ETNs? I think it's as good as anything that's been written on them yet. And all that from they guy who's finally going to help us pin the tail on the donkey of IRS fund ruling obfuscation. It looks like the floodgates are opening on the ETN front. Wow, Goldman. I'll tell you what - that does make you look a bit more at the issuer risk...and going forward it will be extremely interesting to see how far the SEC lets counterparty go on the notes, or if it just becomes a sort of free-for-all. Hey I can do notes too...

And on the legislative proposal to force 401(k)s to have an broad based, low fee index option. Good lord, did you see the fierceness of the reaction? You know why? Because the 401(k) is one gigantic cash cow for the financial services industry, and particularly the high fee overfed actively managed mutual fund part of it. If it was up to me, I'd scrap the whole system and start over. It's almost as bad as our medical system in the U.S. Too many interests and middlemen in the mix.

Speaking of the legistature, that really shows who the wildcard can be in the process. Who knows what legislators might come up with if they turn their attention this way or that? Maybe they can help us get clarity on those ETNs.

Finally - CNBC. For anyone who watched - Hi Mom! it was not an illustration in complex thoughts thoughtfully explained. It's always like, bang bang and it's over. And they threw up the three ETFs I said I was not buying under the heading "Wiandt's Bad ETFs" or something like that.

I really had only selected those funds to illustrate some key points, which are that I think that investors have to be aware of overbought hot sectors, funky futures based structures and their implications and thinly sliced sectors, which I think are often too thinly sliced to make sense in a broad index investor's portfolio.

That is not to say that many of these funds are interesting and even compelling for some segment of investors. But I've never hidden the fact that I'm basically an indexer. So while the movement toward lower fees in the active and alternative spaces in a more effiicent structure is a great development, only some of this makes sense to me in my own portfolio.

But it was 30 seconds and out with "Wiandt's Bad ETFs" lingering there.

Find your next ETF

Reset All