• Skip to primary navigation
  • Skip to main content
Mullooly Asset Management, Inc

Mullooly Asset Management

Fiduciary Fee-Only Financial Planner | Investment Advisor in Wall, NJ

  • Services
    • Wealth Management
    • Financial Planning
    • Retirement Planning
    • Investment
    • Estate Planning
  • Our Fees
  • About
  • 732-223-9000
  • Schedule A Meeting

Services

  • Wealth Management
  • Financial Planning
  • Retirement Planning
  • Investment
  • Estate Planning

Quick Links

  • About
  • Our Fees
  • Videos
  • Podcasts
  • Blog

Support

  • Contact
  • Client Login
  • Pay Bill Online
  • Form CRS
  • Our Process
Follow us on Facebook
Follow us on Linkedin
Follow us on Twitter
Watch On Youtube

Let’s talk

Exchange Traded Funds (ETF) Explosion Part II

February 22, 2007 by Thomas Mullooly

We’ve seen lots of articles and news pieces about the explosion of Exchange-Traded Funds, or ETF’s. Most of the opinions have been negative.  In fact, one writer compared this with the flood of closed-end funds created in the late 1920’s (before the stock market crashed).

My opinion: ETF’s are a great tool, and worth looking into.

Maybe you’ve heard 80% of most mutual fund managers have trouble beating the market two years in a row.  Combine that with the costs built in (sales charges, management fees) and you’re destined to fall behind whatever yardstick you are measuring with.

Some of the problems with mutual funds:
-New trading limits (especially international funds). Some managers got in trouble with “late trades” and now you (the small investor) have limits on how frequently you can trade these funds.
-No limit or stop orders on mutual funds
-You cannot short mutual funds
-Mutual funds do not trade options

Exchange Traded Funds:
-No trading limits, they’re bought/sold like stocks
-Limit and stop orders are OK
-The funds can be shorted
-Some ETF’s (not all) do trade options.

ETF’s are cheaper and flexible.  Still, WHY use them?

ETF’s usually blanket an entire SECTOR.  Like semiconductors.
Or bio-tech.

In the old days, if you wanted to get into a sector like autos,
you either had to build your own basket of auto stocks yourself,
or find a mutual fund that was heavily into that group.  Since
mutual funds are only required to show their holdings a few
times per year, you never really knew what the manager owned.
And how do you know if you (or the manager) “cherry-picked” the
right names?

Instead, with one ETF, you can buy the entire bio-tech sector
and then sell it (like a stock), when it reaches your price.
If you think a sector like “networking stocks” is due to fall,
you can sell an ETF of all networking stocks short and then buy
it back at a cheaper price.  Or buy puts on the ETF.

One more thing…remember, 80% of the price move in a stock comes
from what’s happening with the sector, and the overall market.
Don’t get hung up entirely on the fundamentals, like most people.
.

Never miss a post...and we deliver!

newsletter mailman

Get our updates delivered right to your inbox. Sign up today!

Success! Now go and check your email to confirm your subscription.

There was an error submitting your subscription. Please try again.

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit

Filed Under: Asset Management Tagged With: ETF's

About Thomas Mullooly

Thomas Mullooly is owner and founder of Mullooly Asset Management, Inc. In 2002 Tom opened Mullooly Asset Management, a fee-only investment advisory firm. As an investment advisor, and not a broker, Tom works strictly for his clients. With the help of point and figure charting, Tom builds a realistic game plan for clients.

1971 State Route 34, Suite 102
Wall Township, NJ 07719

  • 732-223-9000
732-223-9600
  • support@mullooly.net
  • Services
  • About
  • Our Fees
  • Contact
  • Form CRS
  • Videos
  • Podcasts
  • Blog
  • Client Login
  • Pay Bill Online
  • Our Process

The information on this website and blog do not involve the rendering of personalized investment advice. A professional advisor should be consulted before implementing any of the options presented. None of the content contained in this website should be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

© 2022 Mullooly Asset Management Inc. All Rights Reserved.

  • Privacy
  • Disclosures and Legal Disclaimers
  • Privacy
  • Disclosures and Legal Disclaimers

© 2022 Mullooly Asset Management Inc. All Rights Reserved.