Guidelines to start on ETF

[Shiny Things]

thanks but is .SI or .SG?
whats the diff?

You're on Yahoo Finance, right? Then there is no difference - the .SI and .SG codes are just a quirk of the market data feed that Yahoo uses. (The .SI one is better quality data, for what that's worth).

If you're not on Yahoo Finance, and this is your broker platform, then you need to let us know which broker you're using.

 

[Futureskid]

Coming from a guy who promotes futures as safe and profitable and suitable for everyone, this is funny

Did I ever mention that before? U must have let imagination got into your head, don't add too much twists and turns into your imaginary story.

Well, yeah. That's because they kind of are.

Here're just some of the advantages of ETFs (the boring, sensible, physical-replication, unleveraged, index-tracking sort):

1) Instant diversification
You don't have to worry about having all your portfolio in one stock any more, because you own ALL the stocks.

2) Lower volatility
If one of your stocks has a bad day, the rest of your stocks will tend to offset it - so your portfolio's swings and roundabouts are a lot smaller.

3) Not so much default risk
What if you own a bunch of Pear Computers and it goes bankrupt? If you own an ETF, you're only out 0.2% of your portfolio; if you own Pear Computers, you've lost the whole 100%.

4) No bankruptcy risk
An index can't go to zero; neither can an index ETF.

5) Easy stockpicking
You don't have to spend hours deciding between DBS and UOB and OCBC, or Olam and Wilmar and Noble, or Apple and Intel and HP. Just buy the index and spend your time doing something more fun!



Zing!

Seriously, I see u as one of the more experienced person over here who likes to give advice, u should be more objective in your opinion and not letting others have a false hope by listing out all the "advantages" only.

1) U don't own all the stocks, the fund manager replicate it on behalf of u. (I'm sure u know this)

2) Volatility is subject to market conditions and what u are holding, any macro event can shake your index

3) Are u sure about not much default risk? Not to mention synthetic etf on some of them, how about counterparty risk on fund management?

4) Any Index tracking, commodities and others would have this feature.

5) Easy stockpicking? U r probably only looking at US market making new highs, look elsewhere at china, japan, europe, hk/sg. Can u guarantee others that they would be able to break new highs if they bought at the peak?

6) Many others like wide spread, poor liquidity, tracking error in singapore ETF. U can't look at it from your perspective just because US ETFs are more matured than SG.

Please correct me on the above facts if i'm wrong, I always like to be corrected.

Anyway my point is not challenging the good of ETFs, but does it really suits everyone over here? U knew most of them are new here, but u do not know their risk appetite and financial status, and how long is your long term? What if they can't wait for the "long term " to break new highs and they dump everything in just because u said they are the best and safest investment in the world!

Risk comes from not knowing what you are doing, and most do not know.

 

[lzydata]

Did I ever mention that before? U must have let imagination got into your head, don't add too much twists and turns into your imaginary story.

From our last exchange, which was also about the STI ETF (http://forums.hardwarezone.com.sg/70424734-post31.html):

i'm not sure if we are relating to same topic or frequency, but i want to relate my point of active and passive investment becos i saw someone point out that "ETFs is a long term investment that if u look at the history, u would made decent profit!" If u look at any chart of well performing share, u can also say the same thing!

Not sure why need to list out the units issues and AUM, does these help u in your investment?

If your investment is on broad market view, u can also trade index futures as long term investment, have ppl weigh the cost and benefit of both of them?

Indeed, you never explicitly said futures are better than ETFs for the job. You just innocently brought it up to ask questions. It's up to other people to figure out the costs and benefits, eh?

1) U don't own all the stocks, the fund manager replicate it on behalf of u. (I'm sure u know this)

Seriously, nitpick all you want. You want to dispute whether, for example, a S&P 500 ETF really "owns all the stocks" in the S&P 500? Both STI ETFs are invested in 30 stocks, but that is not owning all the stocks, that is "replicating."

We understand that you have a bias towards futures. But based on our last exchange it is reasonably clear to me that you have at best a theoretical understanding of the issues.

The only products that allow investors to own the STI or the local market are ETFs employing physical replication. None use futures. Why?

 

[Shiny Things]

Futureskid, you're being cocky and kind of rude. Cut it out.

Firstly, you completely missed my point. I was arguing the advantages of ETFs over investing in single stocks. I'm not sure what your argument is, other than that you just don't like me and you think it's okay to slag people off because you're anonymous on here - which, stop that, it makes you look bad.

Secondly, I think Izy's being polite when he says you have "at best a theoretical understanding of the issues".

What if they can't wait for the "long term" to break new highs and they dump everything in just because u said they are the best and safest investment in the world!

What would you propose as an alternative to ETFs for long-term buy-and-hold investors?

 

[ochazuke]

Well, yeah. That's because they kind of are.

Here're just some of the advantages of ETFs (the boring, sensible, physical-replication, unleveraged, index-tracking sort):

1) Instant diversification
You don't have to worry about having all your portfolio in one stock any more, because you own ALL the stocks.

2) Lower volatility
If one of your stocks has a bad day, the rest of your stocks will tend to offset it - so your portfolio's swings and roundabouts are a lot smaller.

3) Not so much default risk
What if you own a bunch of Pear Computers and it goes bankrupt? If you own an ETF, you're only out 0.2% of your portfolio; if you own Pear Computers, you've lost the whole 100%.

4) No bankruptcy risk
An index can't go to zero; neither can an index ETF.

5) Easy stockpicking
You don't have to spend hours deciding between DBS and UOB and OCBC, or Olam and Wilmar and Noble, or Apple and Intel and HP. Just buy the index and spend your time doing something more fun!


Zing!

I also started a small ETF portfolio, the only gripe I have is that while its safer than individual stocks, the returns are quite low (currently does not beat inflation). Can't have everything i suppose.

 

[Futureskid]

Futureskid, you're being cocky and kind of rude. Cut it out.

Firstly, you completely missed my point. I was arguing the advantages of ETFs over investing in single stocks. I'm not sure what your argument is, other than that you just don't like me and you think it's okay to slag people off because you're anonymous on here - which, stop that, it makes you look bad.

Secondly, I think Izy's being polite when he says you have "at best a theoretical understanding of the issues".



What would you propose as an alternative to ETFs for long-term buy-and-hold investors?

Alright, i shall listen and put a stop here, it was never my intention to sound rude or cocky.

As what i propose for long term buy hold investors? None, if they do not know what they are doing. If they wish to buy, toss a coin and randomly decide, they tend to be better off than those intentionally trying to control their decisions.