I think I'll stick with mutual funds!

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Callalily
Posts: 32
Joined: Wed Dec 16, 2009 11:42 am

I think I'll stick with mutual funds!

Post by Callalily »

After yesterday's event, I realized that I don't know enough about ETFs to be fooling with it. And I only have around 10K in my Vanguard accounts anyway. I think I'll stick with mutual funds.
jharri71
Posts: 44
Joined: Thu Nov 13, 2008 3:18 pm

Post by jharri71 »

I added $100 to my Vanguard STAR (VGSTX) account yesterday. Not because of the 1000 point drop, but because the market is down about 6% and it is earning nothing in savings (no this is not money from my emergency fund). Maybe this is a little bit of market timing.
OkieIndexer
Posts: 468
Joined: Sun Aug 23, 2009 1:10 pm
Location: Kayaking in Colorado

Post by OkieIndexer »

I had some concerns before, but after yesterday's fireworks with some ETFs literally dropping to ZERO momentarily I definitely have concerns about the safety of ETFs. They are relatively new products compared to mutual funds.

I'm still holding on to my ETFs, but I have to admit to being a bit more tempted to switch into the equivalent mutual funds (for example, switching from VBR to VISVX).

My main reason for going with ETFs in the first place was the slightly lower ER and slightly lower commission at my brokerage ($7 for ETF trades, $10 for mutual funds).

Maybe my concerns are baseless, and ETFs are completely safe.
"In bull markets, people say 'The more risk I take, the greater my return.' But when people aren't afraid of risk, they'll accept risk without being compensated." -Howard Marks, Oaktree Capital
Chuck
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Joined: Thu May 21, 2009 12:19 pm

Post by Chuck »

My take is that holding ETFs is safe, and trading ETFs can be tricky. :)
Tramper Al
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Joined: Thu Oct 18, 2007 11:42 am

Post by Tramper Al »

On the subject of open end mutual funds. I am calculating the $ I want for a buy order at today's close in my 403b, but my AA spreadsheet keeps changing by thousands of dollars every few minutes. Is this an up day or a down day?

Also, I meant for my buy order to be $125, but I think I accidentally typed $125 Billion. Careless, I know, right? I'm sure I can adjust or cancel this MF order anytime before 4pm, correct? This is at Vanguard.

Thanks . . .
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baw703916
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Joined: Sun Apr 01, 2007 1:10 pm
Location: Seattle

Post by baw703916 »

Chuck wrote:My take is that holding ETFs is safe, and trading ETFs can be tricky. :)
+1 (yes, I know people find this annoying, but Chuck has given an excellent take-away message, IMO).

Here's an alternate scenario to consider: what if the hiccup had occurred an hour and 15 minutes later, at about 10 minutes before the close?

Probably it wouldn't have had time to work itself out before the close, and then every mutual fund would have executed purchases/redemptions based on the 4 pm closing price.

So yes, mutual funds are immune to intraday strangeness, but if anything more susceptible to strangeness just before the close. For an ETF, the market would almost certainly have figured out that something didn't add up by the next morning.

Brad

Brad
Most of my posts assume no behavioral errors.
GammaPoint
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Joined: Sun Aug 02, 2009 10:25 am
Location: Washington

Post by GammaPoint »

The only thing that happened yesterday for people who knew what they were doing was a great buying opportunity (if you could log on to your brokerage fast enough). If you always use limit orders you would have had no surprises.
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