ETF trap? What do you think?


This is a great forum. I’d like to get your input on something.

Please prove this wrong, and/or answer the question at the end!

Michael Burry (investor portrayed in the Big Short) and a few others have been recently saying that ETFs are a big theater with a small door.

That big companies which are part of some index get a lot of blind action.

That this is inhibiting price discovery (i.e. you get miss-pricing… which if happening at a large scale could be a bubble).

That if (when) people panic, for some reason or other, and redemptions start, that you might see large spreads between the ETF and the underlying stocks.

Finally the question, if you hold a large part of your investment funds in ETFs, have you considered owning the stocks which are part of that ETF instead? Maybe not get rid of the ETF 100%, but maybe own 70% in the actual stocks and use the ETF for re-balancing for example?

Thanks in advance for your input.

6 posts were merged into an existing topic: Bubble in passive investment funds