ETF Market Timing for ETFs

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Johny.

 

Johny I don't know if you have an association with this mob or why you are mentioning them - I'll assume you just wanted to bring them up for discussion.

From my perspective they should have called themselves ZeroSumGame.com.au

The long term winners in trading are the brokers and the trading sharks.

This is just another gimmick product which attempts to capitalise on people insecurity of being seen as an "average investor" when that is exactly what they are and exactly why they should be investing in index funds over using trading strategies.

 

Hi Chris,
Do you suggest that 'the average invester' should invest in index funds, with a plan to Buy and Hold forever? What benefits does this have over trading ETFs? Do you Know why ETFs are not popular in Aussieland? (800 in the US.)





Johny.

 

Yes.

Those that aren't "professional" traders or investors (as in make their living from trading or investing) will more often than not be better off investing with a buy and hold strategy in diversified portfolio (ETF are great for this) and focus on making money in their day job.

Please note that a diversified portfolio would include international exposure and exposure to different asset classes. This broad statement I have made also doesn't factor for tax implications.

Also I would substitute the word "forever" in your statement for the words "until retirement age" at which point the average investor will stop contributing to their investment portfolio and will likely be looking to live off their cash flows from that investment and in most cases begin to sell down some of their portfolio to find their retirement.

Put it this way, the average Australian would be better off investing like their super funds invest. Whilst we all like to think ourselves as smart as your average Goldman Sachs trader or a Warren Buffett calibre investor, the reality is these people are the exception even in their own professions and the average Australian is just average and should accept that obtaining average returns from their investment portfolio is a good outcome. Plus the average Australian will be far better off in the long run sticking to their day job.

Because trading is a zero sum game. Nothing is produced in society by trading. Meaning for someone to win someone else has to lose. So society is better off leaving it parked and the "trader" is better off getting a real job.

Plus when you factor that brokers are also taking a slice on the pie each time your trade then there are more losers than winners amongst traders themselves.

So my problem with it is that it is economically wasteful to have uneccesary and fundamentally useless things in society. Though of course whilst I dream of average Australians just getting on with their day jobs and enjoying life whilst leaving their money parked in an ETF it's probably always going to be a pipe dream.

Despite my dreams it never ceases to amazing how much "intrinsic value" and "happiness" seems to be derived from "gambling" and "feelings of hope". It's like 90% of the world prefers to make a bad investment, but get "hope" and "a chance" as a by product then make a smart investment and know exactly what they are going to get.

And thus the lottery ticket was invented...

Never done a huge amount of research into it, but I imagine more than anything it's because, like with most things, Australia is not as financially mature as the US market. I expect with time more and more Australians will see the logic of ETFs and move into them.

 

http://www.invested.com.au/79/how-safe-etfs-35223/

 

http://www.standardandpoors.com/ser...lobwhere=1243744514371&blobheadervalue3=UTF-8

 

I've sometimes thought the 'blue chips' in aus may be more obvious so people aren't bothering to use the ETF to diversify.

 

@twisted strategies, you're very talkative tonite.

 

not a lot of news ( that isn't politics )

and wanting to see more market direction before changing the focus of my research