The Normalcy Behind ‘Abnormal Returns’

October 10, 2017 In terms of investing, is it fair to characterize you as more of an index investor rather than an active investor? Or am I mischaracterizing that, in terms of the philosophy behind the site?

Viskanta: No, I think that’s true. But that’s also a function of both a personal evolution, and an evolution in the markets.

I’ve been investing for almost three decades now. And like a lot of people, when I started off, I wouldn’t say I was hyperactive, but certainly an active trader and investor in any number of different types of instruments. As I've gotten older, I’ve learned more about the markets and I have a longer time horizon, I’ve become less active, and discovered that a lower-cost approach suits me and my personality much better.

But that runs in parallel with what's been happening in the markets as well. I've gone from a world where your only option was buying individual stocks or active mutual funds, and now we’re in a world where you have a palette of instruments that is almost unlimited.

I don’t know how you keep track of it, but it used to be easier to follow the new ETF offerings and issuance. Now it’s nearly impossible for me to keep up. I keep finding funds I've never heard of. And I think, how did I miss that?

The world has changed, and there’s some interaction between my background and market changes behind the site. In the end, there are a couple of different purposes. One is just saving people time. And two is hopefully highlighting some things they might have missed. If I get an “atta boy” email from a reader, it’s usually on one of those two topics. What are you thinking about now and about the future of investing?

Viskanta: Bitcoin is one of those things I keep linking to, and keep reading about, and keep listening. I should say bitcoin in the broader cryptocurrency idea is what I’m thinking about.

I wrote a post talking about how I own $100 in bitcoin, just to keep me engaged in it, and try to wrap my head around it, which I have to admit I haven't done yet. I really can't come up with a definitive sort of thesis on it, other than I think the technology is interesting. But from an investment perspective, it’s still really challenging to me.

When and if we have bitcoin futures and crypto-index fund ETFs that may follow, it’s all fascinating to me. But I don’t have a really strong feeling about where it’s all going to end up.

I wrote a post maybe six months ago, “Keeping ETFs Weird.” What I continue to find fascinating about ETFs is that it’s really this relatively open opportunity for not only existing firms but startup firms to put their ideas out there into practice.

Oftentimes, you and I have probably seen funds where we think, there's no way this thing is going to fly. And it doesn’t. And the opposite may be the case, where you say, this thing has no chance. And of course it ends up with $500 million in assets after a year.

So you just don’t know. And you don’t know until it’s out there, and people have an opportunity to interact with it.

Other than having access and cost advantages, this ongoing real-life tournament of investment ideas may be one of the most attractive features of the ETF marketplace, and what keeps it interesting and vital and a fascinating thing to study.

Contact Drew Voros at [email protected]


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