i rely on the pause button and google search - when it moves too fast for me.

Wait for the next "big one" and you'll find out.

I think the problem is a combination of an over valued stock market with a number of stocks being especially over valued because of the blind ETF investing. When the air starts to go out of the market the ETF's will be sold and the market cap metric used to choose those stocks will reverse - smart buyers will not be around to provide a bid until valuations appear to be attractive.

Those days have never existed in the market. Read any of the classics like "Reminiscences of a Stock Operator " or "How I Made $2,000,000 in the Stock Market" or many other "old" books from yesteryear. The most careful thing done in last century's stock market was marketing. But in any event, what happened then was then. 2017 is where you need to be ;-)

Hi Gerald - I respectfully disagree that "those days have never existed in the market." Perhaps I was unclear - I wasn't saying that speculation is a new phenomenon in markets (it goes back beyond the Roman Empire most likely). What I was trying to say was that there used to be an approach to seeing money grow over time through slower, more long-term decision-making. I think a number of factors today have combined to drive a type of short-termism which is actually relatively new in recorded financial history.

agree. I would like to understand the down votes to that comment.

Henning K., please read the last two letters from Howard Marks at Oaktree Capital. Howard dives deeper into the potential dangers of the growth in ETF, especially, bond ETFs.

Hey MC.... to be clear, I am not averse to ETFs such as the SPDRs which enable investors to track indexes easily and replicate them in a low-cost fashion. The problem comes with trying to express complicated trades in simple fashion (take HYG and JNK for example - how liquid will they be when the market is trying to sell them aggressively? I don't know, but I can guess). I think, once you've seen the full interview with Steve Bregman, you'll have a better understanding of the full thrust of this argument and, while it's impossible to lay out an entire thesis surrounding ETFs in one piece, what Steve does is pick apart some of the 'plumbing' and demonstrate some of the things that investors probably don't realise when opting to "go long biotech" or "go long junk bonds" - two ideas which, pre-ETFs would have meant considerable research to identify either good companies or sound credits but which are now reduced to a click of a mouse. Steve's observations are fascinating and, to me at least, scary. Again, it's not that ETFs shouldn't be used - I agree with Jack Bogle as I said in my piece - there is definitely a place for them. I just happen to think that the more esoteric ones or the double-, triple- or even quadruple-leveraged vehicles will appeal in large part to the last people who really ought to use them to invest. Either way, I appreciate the feedback and I hope you watch and enjoy the conversation with Steve. If not, I'll see you back here on the weekend ;) Cheers

Appreciate the comment Grant. I will absolutely listen to Steve's interview though I have disagreed with his point of view on ETFs before. Unfortunately, comment section is not a great venue to debate the finer points but i certainly appreciate a lively and spirited debate. Best MC

Likewise! There's no cut-and-dried answer and nobody (least of all Steve himself) believes he is 100% right and everybody else is wrong, but he's one of the only guys looking at the possible downside (of which there is one to everything) of a vehicle which has mushroomed during the most benign, upward-trending market in living memory. I thoroughly enjoyed my conversation with him (as I hope will the Real Vision audience) and that extends to conversations like this, MC! Thanks for getting involved in the debate

"Next: passive ETFs are not just passive. Smart active managers are using passive ETFs as an efficient vehicle to obtain exposures in an active portfolio" So, fees on top of fees is a good thing...

Having watched the series now I think MC your comment about this being a "Not a very well researched or even moderately balanced piece." is a bit out of whack. Almost everyone who appears on RV is probably ten times smarter than me and I thumbs up 90% of the presentations and leave blank most of the rest. I have thumbs down only about 6 since joining. Steve Bregman's series is excellent and he came across as deeply thoughtful, humble and extremely knowledgable about the topic. There is no doubt there was (and is) a place for ETFs. I think the point of the series is that ETFs are quickly becoming a monster that will likely feed on itself in the end. Just look at the charts and extrapolate the passive sector by just another 2 to 4 years. When everybody is into something its time to think about getting out. I own GDX and could see me buying some other specialist ETFs, but I own more direct stock. Many of my colleagues have just the indexes in their 401Ks. It just all feels like another new ERA to me with few thinking its a bubble...... However it most certainly IS a bubble driven by Fed Reserve liquidity excess as never seen in history before. Having said that I expect the DOW may well soar as bonds collapse when the music stops.

Hi Damian I have never said that I "hate ETFs". That would be a very foolish statement. What I have tried to say is that, while I agree with Jack Bogle that Indexation and passive investment makes a lot of sense for a lot of investors, the proliferation of ETFs that try to express complex ideas in a very simple way are both largely untested in anything but gently rising markets and potentially extremely dangerous when markets reverse. As I have said many times before, 2x, 3x and even 4x leveraged ETFs do not give retail investors what they think they do and should only be used in the short term by experienced professionals. Also, offering a one-click way to buy 'junk bonds' (to choose but one of my betes noir) makes a mockery of the incredible due diligence process that seasoned investors have always done in identifying good credits and weeding out poor ones. 'Junk' may be an asset class, but it's also a valuation and, amongst the 'junk' there are always good value bonds incorrectly priced as well as debt which will ultimately go to its correct value of 0. As for my 'hedge fund buddies', I like to think I count many types of investors amongst my 'buddies' and would certainly never restrict them to hedge fund managers. I try to spend my time with good people who are smarter than me (the latter half of that Venn diagram being a far bigger circle and a very easy one to populate, fortunately!!). I am extremely lucky to count many non-hedge fund managers amongst that group and I learn an incredible amount from them. ETFs provide a very good way to invest in, for example, foreign countries but those types of ETFs will, in most cases, replicate the benchmark Index so being 'long Japan' will effectively mean being 'long the Nikkei 225' which is quasi-indexation and, for many investors, a smart strategy. God forbid anybody launches a 'Japan Junk Bond ETF' that retail investors can avail themselves of. It's impossible to answer every question when filming a conversation such as mine with Steve Bregman - such things are always a world view and, as such, a starting point for debate rather than any kind of absolute statement of fact. Many people will agree with what they hear, many will disagree (and I welcome that) but hopefully many others will have their interest piqued enough to do their own due diligence and come to their own conclusions. That, in essence, is the idea behind Real Vision. On the topic of "so-called experts getting it wrong", one has to understand that everybody who makes a prediction or a recommendation about either a specific stock or a macro theme (whether they be a newsletter writer, investment professional, hedge fund manager or retail investor) is essentially making a guess about an unknowable future so of course they will get it wrong. Often. Even the very best investors agree that getting 55% of your bets right is a great way to be successful - as long as you size those bets correctly and handle both your losses and your successes the right way. Blaming newsletter writers who make what can never be more than an educated guess about future direction misses the point. The trick, for retail investors, is to weed out the people whose process is less rigorous than others and stick with those who demonstrate a framework that stands up to scrutiny better BUT to own every trade once they decide to back it with their own money and not rely 100% on others to do the work for them. Caveat emptor. Thanks for your comment on the video. Cheers Grant

Hello Grant, Thanks for your reply and thanks to taking the time to address some of my issues. I'm still a big fan of you and your work and I love Adventures in Finance. Keep up your great work and I always look forward to hearing your opinions. All the best, Damian

Re 3.) Nothing is wrong with that. But: Fact is that vast majority of active managers (i.e. buy stocks based on own estimate of prive/value disconnect) don't beat the market over long time horizon. The ones who do, cannot be identified a priori because there is no direct link to any characteristic. Of course, if you think you can do better than all the professionals, go ahead. But an ETF provides a very efficient, cheap tool to capture equity risk premium (without any work compared to your work and opportunities cost analyzing all those companies). And that is a good stuff for retail investors for sure (I am talking about broad market products with rather buy & hold approach here and not niche/levered whatsoever). So again, there is nothing wrong, but it is not the thing you would do totally from a rational investor standpoint. And in that context your 2. point is not really a -let's say- smart comment to make.

At what cost? Because, in the end, it is the taxpayer who foots the bill!!

Investors should avoid funds and etfs for a while, I suggest you take a look at what happened on Aug. 24, 2015 to the index and to many ETFs that day. Why doesnt anyone consider buying directly stocks and bond for a while, and avoid these containers.

aha, if you think you are safer betting on selected stocks - go ahead. On Aug 24 2015 you had a problem in various securities if you used market orders, which is indeed a terrible thing to do. I am not looking at them to trade intraday but to express asset allocation efficiently and cheaply in long term. They are great vehicles for that. I am just annoyed that the criticism is very undifferentiated and not really valid in some points. The fact ETFs may distort price and market pricing mechanism doesn't imply anything about relative performance to active investing. Those are separate discussions and are presented at causality (at least how I understood it listening to the presentation).

The problem appears when certain products are dumped onto retail investors who don't know what they're buying and later sue their advisers and banks like happened in Spain with certain debt securities. To go down the route of complete deregulation you would need people to pass something like a driving test for investing and make sure they actually sign off on the potential consequences of taking on risk. else I feel they are mostly right to consider themselves victims of the system...