Friday, November 20, 2009

ETF madness

We've had money in traditional mutual funds for a long time.  For example, when I started working for a new company in 1988, one of the funds available in their 401k was Fidelity's Contra (FCNTX) and I still own those shares.  It's not like I intentionally invest for the long term but 20 years certainly isn't short term!

My basic philosophy is to save as much as you can then invest in something that you expect to be more valuable in the future.  I figured that whatever I bought at forty would be more valuable when I was sixty.  (Of course I'm not talking about a six-pack of  beer that didn't make it past my fortith birthday!)  It isn't really a difficult thought!  So I bought some stocks and some mutual funds and we did ok.  Let's face it, folks, this isn't rocket science. 

The folk who are objecting at this point are the ones who just started investing about two years ago.  You can hear the howls "I bought XXX  in 07; look how I'm doing!"  Well, I feel for you.  I bought Armstrong Flooring not long before the company went under due to asbestos claims.  I bought Thornburg Mortgage before the mortgage debacle. Back in 1974 I bought IBM just before the market crashed.  Trust me; worse things will happen to you.

Invest in the market; invest broadly; read about the companies; then read the papers & pay attention:  you will be fine.  If I'd read about the asbestos claims; I could have gotten out of Armstrong.  I drank the coolaid about Thornburg being a 'different' company.  More fool me!

So now we have ETF's.  You can buy small sectors of the market or large ones via these products.  Some are managed; some are indexes.  There are a lot of new ways to invest here.  We can talk about them later.

"The trouble with most people is that they think with their hopes or fears or wishes rather than with their minds."  - Walter Duranty

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