On Saturday morning, the normal quiet of Devonport was punctured by screaming sirens and roaring engines.
I am a night owl. I trade on the European markets at night via a trading desk. Then I rest and read. Have supper with my wife.
As with other night owls, society punishes us, since more of the world are morning larks. And the world is built for early risers.
Saturday morning was especially brutal. The sirens seemed quite close. I’d just gotten out of bed.
There had been a supermarket stabbing the day before at Lynmall, to the west of the city. Life in any city always seems to be in a state of flux, but lockdown Auckland seems to load even more pressures on some people.
My first thought was that there was some kind of violence again. Another perpetrator. And several police cars were now in the vicinity.
In actual fact, a woman we know a block away had woken to find her garage on fire. An EV car battery had started it, and the car was written off. The sirens were our fire brigade. On board, a financial adviser by day and volunteer firefighter I know well.
The fire was a terrible thing, but it was not the violence I had been conditioned to fear from the supermarket stabbing fresh in the news.
Our minds are conditioned by recent events and our backgrounds.
And so this is what I must avoid in today’s subject: ETFs. Exchange Traded Funds.
We are receiving more questions about them. But, as a value investor and trained financial accountant and analyst, I have been wary of them.
I’m conditioned to look at annual reports and calculate financial ratios. To assess an individual company and its stock. The concept of a fund with potentially hundreds of companies and ‘diworsification’ furrows my brow.
Let me try to put that conditioning to one side and take an objective look at ETFs.
First, a quick definition for you, courtesy of Investopedia:
- ‘An exchange traded fund (ETF) is a basket of securities that trade on an exchange just like a stock does.
- ‘ETFs can contain all types of investments including stocks, commodities, or bonds; some offer U.S.-only holdings, while others are international.’
So I started with a call to a friend of mine. A seasoned investor. And one with around 20% of his portfolio in ETFs.
I began with the question: Why?
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