ETF Fear Mongering Myths

August 15, 2019

ETFs have existed for more than 26 years. That’s longer than a third of the U.S. population has been alive.

Through the dot-com crash, the Global Financial Crisis, taper tantrums—and, more recently, a 20% market swoon in the back half of last year—ETFs have aged well. But somehow, ETF fear mongering is still alive and well. Some recent examples:

“ETFs have been hugely popular, and now roughly half of all stock is owned by ETF buyers. That would imply that if the markets start to decline, half the owners in the market could be selling the entire market when they hit the “sell” button.” —Business InsiderIn a liquidity crisis, here’s what to look for

In a Down Market, ETFs Could Make Things Even Worse” —The Wall Street Journal

“ETFs Threaten to ‘Amplify’ Systemic Risk When Liquidity Dries Up” – Bloomberg

Here’s a Barron’s Q&A with an advisor who oversees $3.6 billion!



What? Where is this coming from? I’ll get to that in a minute, but first, let’s tackle the false narratives, which is surprisingly easy to do with a few pretty charts.

Half of all stock is owned by ETF buyers? Nope.


For a larger view, please click on the image above.


Maybe they meant bonds? Nope.


Source: A Wealth of Common Sense, 2/27/2019

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