Q: I have read your recent ETF and Mutual Fund Update with great interest. The forecast growth numbers for the ETF industry are truly impressive. On the surface, ETFs would appear to be a magic bullet for individual investors who wish diversification at low cost.
Over my lifetime, I have seen a number of financial trends/theses, which start with very strong growth. However, after a period of time, these trends invariably collapse and end badly for the "buy and hold" investors. Do you see any possibility of this occurring for ETF investors? What risks do you see for (conservative, retired) investors who have a portfolio of ETFs as opposed to a basket of diversified, dividend aristocrats? Have you seen any analyses which look at the long-term impact of this trend (i.e. what will happen in the markets if most people buy ETFs and not individual stocks? What risks does this trend pose to individual investors?). Thank-you for your insightful advice.
Over my lifetime, I have seen a number of financial trends/theses, which start with very strong growth. However, after a period of time, these trends invariably collapse and end badly for the "buy and hold" investors. Do you see any possibility of this occurring for ETF investors? What risks do you see for (conservative, retired) investors who have a portfolio of ETFs as opposed to a basket of diversified, dividend aristocrats? Have you seen any analyses which look at the long-term impact of this trend (i.e. what will happen in the markets if most people buy ETFs and not individual stocks? What risks does this trend pose to individual investors?). Thank-you for your insightful advice.