A Cautionary Ode to ETFs

Oh Exchange Traded Funds, what are you doing to us?

I fill my days 
with work and fun
Rising each morning
to row
with the sun

I lead my family
my wife and sons
and carefully tend 
to the management of our funds

I read about companies
their profits and health
and through 3 Bear Markets
I've still grown my wealth

But Larry Z, alas
is not like me
he's all in on Exchange Traded Funds
preferring to be "free"

Time is money
Larry Z well knows
while scrolling Netflix and TikTok
as his ETF money passively grows

And when times are good
Larry Z may be all right
His wealth builds steadily
out of mind, out of sight

But when bears come around
as bears always do
eating everyone's profits
and all of Larry Z's too

I hope he will learn
to set aside time
just minutes here and there
to learn about companies
and avoid the next bear

To actively invest in the best
and not passively invest 
in all the unprofitable rest
and above all
to be wary of too easy
too passive
overstretched
unprotected
and vulnerable
ETFs

---

Is this little poem too dramatic? Maybe.

But I would argue that it is nowhere near as dramatic as having to suffer 25% losses to your investments for 10 straight years.

And that is exactly what would have happened to any passive ETF investor in the S&P 500 between the year 1999 and 2009.

We may be enjoying the longest bull market in history, but that is no reason to shuttle your money into ETFs so that you have more time for streaming.

Even if a bear market never arrives again, passive, hands-free investing is still:

• unfulfilling

• slow

• and vulnerable

Unfulfilling because it is bland and teaches you nothing about yourself or the world around you. The best rewards are those you know you earned.

Slow because it can take as much as a decade for your wealth to grow at all. Imagine losing money for the next 10 years.

Vulnerable because low quality companies always affect your profits and, even worse, because the company managing your ETF can sell you out at any time, even at a major loss to your investments.

By all means, stash some of your investment capital in Exchange Traded Funds. In 10 or 20 years’ time, you will remember to check your account and maybe find a pleasant suprise.

But if your aim is to:

• save time

• earn more money

• and grow as a person

You need to invest actively.

Save time by earning money in the next months and years, so that you can actually use and enjoy it. You don’t have to wait decades if you invest actively.

Earn more money by investing directly in the best companies, so that their success is truly yours. You don’t have to let the underperforming stocks in your ETF overshadow the money makers.

Grow as a person by actively following the development of your chosen companies. You will understand what is happening in the world and get better at choosing winning companies and winning times.

A passive life is one not well lived.

Invest actively and the rewards will be yours.

Thanks for reading.

To your wealth!

Roger S. Conrad