Having to wait until the end of the day to sell makes the difference between meeting and not meeting one's goals?Q. Why do you prefer ETFs to mutual funds and individual securities?
A. I'm not interested in picking individual stocks.... I used to invest almost my portfolio in traditional index mutual funds. But mutual funds trade only once a day and I want to be able to sell when I want to....
One of the most important benefits for me is the liquidity. It allows me to adjust my strategy as I need to so we can meet our goals. I don't trade frequently, but I like having the ability to move quickly. And for me, there's an emotional component. Using ETFs gives me some peace of mind--I like knowing that at any given moment I can adjust my investing strategy without having to wait until the end of the day.
In addition, ETFs provide me with incredible diversification, which helps me manage risk.
I assume that's he's thinking about the possibility of seeing a 1987-style crash in progress and being able to protect his family by bailing out early, while the poor mutual fund holders have to watch the ticker drop, drop, drop hour after hour. Can anyone form any other interpretation of his comments?
I wonder whether this rationale is shared by many other ETF buyers, and how often they check the stock market every day to be ready to sell their ETFs?