ETF question

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harry
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ETF question

Post by harry » Mon Oct 27, 2008 12:47 pm

I am confused about ETFs. For example, what would need to happen to drive the share price of (VTI) below say $35

livesoft
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Re: ETF question

Post by livesoft » Mon Oct 27, 2008 12:58 pm

harry wrote:I am confused about ETFs. For example, what would need to happen to drive the share price of (VTI) below say $35
Since the current price of VTI is about 44, to get to 35, the value of the stocks in the Wilshire 5000 total market index would have to drop to 35/44 of their current value. That is, the stock market would have to go down by about 20% from current values.

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Rick Ferri
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Post by Rick Ferri » Mon Oct 27, 2008 12:59 pm

The Vanguard Total Stock Market ETF (VTI) follows the MSCI Broad US Market index. If the intraday value of the US stock market as measured by the MSCI Broad US Market index fell low enough, the market price of VTI would fall in unison.

Rick Ferri

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harry
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Post by harry » Tue Oct 28, 2008 9:16 am

Rick

Given the alarming amount of Mutual Fund redemptions happening at this time is it likely that the share price of (VTI) will be driven down to $35 or below.

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Rick Ferri
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Post by Rick Ferri » Tue Oct 28, 2008 5:44 pm

harry wrote:Rick

Given the alarming amount of Mutual Fund redemptions happening at this time is it likely that the share price of (VTI) will be driven down to $35 or below.
Vanguard ETFs are index funds, and that means you get the return of the stock and bond market when you invest in them. The price of Vanguard ETFs do not change just because more people are redeeming shares. So, the price of VTI will not go down to $35 unless the stock market also is going down so that VTI has a net asset value that is equal to $35.

Rick ferri

SmallHi
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Post by SmallHi » Tue Oct 28, 2008 5:56 pm

Not that this adds much to the original question, but mutual fund cash flows (whether thats into 5 star funds, or out of a particular category) are great contrarian indicators.

I've often asked myself. Is recency bias the worst behavioral flaw we have? Seems more widespread than even overconfidence, home bias, or any others I can think of...

sh

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cflannagan
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Post by cflannagan » Tue Oct 28, 2008 6:05 pm

SmallHi wrote:Not that this adds much to the original question, but mutual fund cash flows (whether thats into 5 star funds, or out of a particular category) are great contrarian indicators.

I've often asked myself. Is recency bias the worst behavioral flaw we have? Seems more widespread than even overconfidence, home bias, or any others I can think of...

sh
Is there a free service that tracks mutual fund cash flows (in & out), especially for major mutual funds like Vanguard/Fidelity/DodgeCox, etc?

No, I don't plan on actually using it as contrarian indicator :)

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Post by Karamatsu » Wed Oct 29, 2008 1:29 am

Vanguard ETFs are index funds, and that means you get the return of the stock and bond market when you invest in them.
That's not strictly true, though, is it? As far as I can tell, index ETFs are just like any other mutual fund in that the market price can diverge from the NAV depending on information imbalances and investors' expectations of the future value of the portfolio. The only thing keeping the market price close to the NAV is arbitrage. But if there's a big short-term imbalance between buyers and sellers, you could get significant divergence through momentum, and since it is often hard for individual investors to get real-time NAV data, we'd have no way to know, would we?

prinx
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Purchasing ETF end of year. Is there a risk of buying Div.?

Post by prinx » Sun Nov 02, 2008 2:42 pm

Purchasing ETF end of year. Is there a risk of buying Div.?
I plan on Harvesting losses from Mutual funds before the record date of distributions. I will then make the transitions to ETF's. Is there a record date before EX dividnend date for ETF,S like Mutual funds?
Burt S.

livesoft
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Re: Purchasing ETF end of year. Is there a risk of buying Di

Post by livesoft » Sun Nov 02, 2008 2:45 pm

prinx wrote:Purchasing ETF end of year. Is there a risk of buying Div.?
I plan on Harvesting losses from Mutual funds before the record date of distributions. I will then make the transitions to ETF's. Is there a record date before EX dividnend date for ETF,S like Mutual funds?
Burt S.
Yes.

prinx
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distribution date for ETF

Post by prinx » Sun Nov 02, 2008 3:21 pm

Thank you Livesoft.
Is it necessary to call each ETF company about the date of distribution or is there a site such as Morningstar where this info is conveniently available?

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Re: distribution date for ETF

Post by PiperWarrior » Sun Nov 02, 2008 4:59 pm

prinx wrote:Is it necessary to call each ETF company about the date of distribution or is there a site such as Morningstar where this info is conveniently available?
You can visit the fund company's web site and find the distribution schedule and/or the historical distribution dates on the web site and/or the prospectus. Chances are you can quickly find them before you can get to a real person on the phone.

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