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Discussion: (5 comments)

  1. Citizen Buddy

    “1. Markets in Everything: The Nashville Area ETF launches today, the first city-based exchange-traded fund, based on a basket of Nashville-area publicly traded companies.”

    The “Honky Tonk ETF” owns no honky tonk stocks.

    ETFs are certainly expanding from low cost index funds to funds that have a marketing angle with a narrow focus. A contrarian might think this adds evidence of a top in the current market cycle.

    1. Methinks

      I’m trying to figure out what you’re trying to say.

      1. Citizen Buddy

        Two things:

        1) Nashville is the home to honky tonk music and the Nashville Area ETF is nicknamed the honky tonk etf, but it has no music oriented cos. in it — therefore irony.

        2) ETFs started out as low cost indexes (UITs) but are now entering a stage of baskets of stocks with appeals other than low cost, but rather bundles of marketing products. What’s next, a poodle products etf(POO) that appeals to dog lovers? Thus, the easier sale of bundles of equitites might indicate a market top to contrarians.

        This is certainly not a criticism of etfs but just some thoughts on current developments.

        These two thoughts should have been separated.

        Does it figure better?

        1. Methinks

          Yes, Cit Bud. I guess calling it honky tonk is just cool!

          You’re right that the nature of ETFs has changed. That can be chalked up to their success. There are now ETFs to cater to every need and they can be useful in ways you perhaps haven’t thought of. On the other hand, you’re right that costs are something to watch out for – the variance in costs is large.

          Worse still is that some ETFs are incredibly poorly constructed. The ultra-long and ultra-short ETFs are just hideous. However, they remain popular and one of the reasons for their popularity may be that people who cannot short in their accoounts (for numerous reasons) may use ultra-shorts as a rough hedge. Also, ultras are a way to increase leverage.

          I don’t know that there’s a top to this market. I think that there will be more failed launches of ETFs, but their existence serves a need in the market and I think they’re here to stay.

          1. Citizen Buddy

            Oh yes, I hope ETFs are here to stay because I have thirteen of them. I am considering ultra-shorts and may invoke one when at some time.

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