4 ms·

ETFs are a relatively recent phenomenon, the criticism I remember from 2008 era is having paycheck + employee stock purchase plan + 401k concentrated in a singl

by lxm 2y ago

ETFs are a relatively recent phenomenon, the criticism I remember from 2008 era is having paycheck + employee stock purchase plan + 401k concentrated in a single stock - employer's.

Joel_Mckay 2y ago
[flagged]
nradov 2y ago
ETFs are mostly irrelevant from a 401(k) perspective because no one is trading on a daily basis. Some 401(k) plans do now offer ETFs among the investment options but for the most part they have always focused on regular mutual funds. Average expense ratios have come down a bit since 2008.
- Joel_Mckay 2y ago
  Regular mutual funds usually have higher risk and tax exposure than the ETFs... Met a lot of bums in suits trying to sell me on several flavors of BS over the years. lol =3
  - throwaway2037 2y ago
    > Regular mutual funds usually have higher risk ... than the ETFs. Can you provide some specific examples? If anything, the transaction friction around mutual funds prevents most regular investors from unnecessary trading that exchange-listed ETFs allow. TL;DR: For most people, more trading means more losses or worse returns.
    - Joel_Mckay 2y ago
      There are several potential mutual fund problems, but the ones most consumers are exposed to arise from institutional and private "investment advisors". There is no legal protection from banks externalizing toxic assets acquired though risky decisions onto customers, and or ridiculous ballooning management fees siphoning off actual profit. The other issues are mostly from various end-runs around acceptable market rules and practices. In general, most amateur holds permute well below 3 to 4 months on average. Note the old joke: "Bulls make money, bears make money, pigs get slaughtered"... was never funny for those providing cash capital to gamblers. Most people assume they are luckier than average... and most of Las Vegas was also built on losers money. Have a great day, =3
      - JumpCrisscross 2y ago
        You’re mixing up adviser fees (ETFs have lower fees than mutual funds; neither is directly related to adviser fees), toxic assets, CMOs, balloon mortgages and possibly management fees and carried interest. These are related concepts inasmuch as they’re all financial terms.
        Joel_Mckay 2y ago
        You seem confused by my frustration with tools towing the company line rather than providing reliable investment advice. Personally, I prefer retaining the option to sue people that pull stunts. But to each their own... =3
        JumpCrisscross 2y ago
        > I prefer retaining the option to sue people that pull stunts If that's an option for you, sure. I work in finance and retain FINRA arbitration as a customer. When I'm signing with clients, I do not like to include it--I have a strong advantage in court and don't want a venue that's biased against me as a professional. All of this is totally irrelevant to ETFs, mutual funds and CMOs because those are distributed funds whose terms aren't negotiable after offering. (If you're worrying about suing the guy selling you ETFs, you're doing something wrong. Probably overtrading.)
        Joel_Mckay 2y ago
        [flagged]
        JumpCrisscross 2y ago
        > having a robust legal position is still rather important Zero competent securities lawyers will argue waiving FINRA arbitration universally puts one into a more robust legal position. For most Americans, it waives significant consumer safeguards and opens up realms of litigation tactics that are barred by industry rules but not law.
  - nradov 2y ago
    You seem to be confused about finance. There is no particular connection between a fund's risk and tax exposure, and whether it is exchange tradable or not. Some regular mutual funds are very low risk. Some ETFs are very high risk. Tax exposure is largely irrelevant for 401(k), IRA, and other tax-free retirement accounts.
    - JumpCrisscross 2y ago
      > no particular connection between a fund's risk and tax exposure They seem to be posting a lot of word-salad comments, but assuming good faith, they're saying these are separate downsides of mutual funds over ETFs. Mutual funds trade on your behalf, like an ETF, but they pass through the gains and losses. That can be painful if they realise those gains when you'd rather not have them, or crystallise losses when you don't have offsets. In this, they're correct. On risk, they're wrong--you can stuff nonsense into ETFs as comfortably as mutual funds. What they're indirectly criticising here is active versus passive management, which is its own can of worms. The only advantage of a mutual fund over an ETF is it provides friction to trading. Otherwise, they're a vestige from the cusp of computerised portfolio management. (If you have more than ~$1 to 10mm, you should be rolling your own portfolio in most cases.)
      - Joel_Mckay 2y ago
        This account posts a lot of off-topic straw-man arguments, and wild context guesses like regular bot slop. My issue with bank-fool recommend mutual funds is primarily they are often a self-serving structured product. i.e. the odds a sucker never sees a consistent behavior is far greater than random chance, and a unconstrained arbitrary guess of a chicken would likely perform better in the markets. Best of luck, =3
        JumpCrisscross 2y ago
        > bank-fool recommend mutual funds…the odds a sucker never sees a consistent behavior is far greater than random chance Again, you’re criticising active management in general. (And seem to be mixing up alpha and tracking error. Passively-managed funds aren’t aiming to outperform the market.) There is no evidence actively-managed ETFs (or hedge funds, for that matter) outperform actively-managed mutual funds. There is also not a material difference in tracking error between their passive products. ETFs are a retail product. Like mutual funds. Make financial decisions based on the product, not the wrapper. (Also, where in the fuck does one go to get mutual funds in 2025 anyway?!)
throwaway2037 2y ago
Do 401k plans allow people to buy single stocks? I never saw it in my experience. I cannot believe that would be considered "prudent" by financial regulators. However, when you leave a company you can "roll-over" your 401k into an IRA, then you can go wild and buy anything that you want (IBRK allows it).
- bdangubic 2y ago
  i401k’s which you have to manage yourself if you are a contractor allow you to purchase whatever you want depending on where your account is. I was with Vanguard and they do not allow it - I moved my account to etrade and now my 401k account is basically like my brokerage account, I can buy whatever I want.

by lxm 2y ago

ETFs are a relatively recent phenomenon, the criticism I remember from 2008 era is having paycheck + employee stock purchase plan + 401k concentrated in a single stock - employer's.

Joel_Mckay 2y ago

[flagged]

nradov 2y ago

ETFs are mostly irrelevant from a 401(k) perspective because no one is trading on a daily basis. Some 401(k) plans do now offer ETFs among the investment options but for the most part they have always focused on regular mutual funds. Average expense ratios have come down a bit since 2008.

Joel_Mckay 2y ago
Regular mutual funds usually have higher risk and tax exposure than the ETFs... Met a lot of bums in suits trying to sell me on several flavors of BS over the years. lol =3
- throwaway2037 2y ago
  > Regular mutual funds usually have higher risk ... than the ETFs. Can you provide some specific examples? If anything, the transaction friction around mutual funds prevents most regular investors from unnecessary trading that exchange-listed ETFs allow. TL;DR: For most people, more trading means more losses or worse returns.
  - Joel_Mckay 2y ago
    There are several potential mutual fund problems, but the ones most consumers are exposed to arise from institutional and private "investment advisors". There is no legal protection from banks externalizing toxic assets acquired though risky decisions onto customers, and or ridiculous ballooning management fees siphoning off actual profit. The other issues are mostly from various end-runs around acceptable market rules and practices. In general, most amateur holds permute well below 3 to 4 months on average. Note the old joke: "Bulls make money, bears make money, pigs get slaughtered"... was never funny for those providing cash capital to gamblers. Most people assume they are luckier than average... and most of Las Vegas was also built on losers money. Have a great day, =3
    - JumpCrisscross 2y ago
      You’re mixing up adviser fees (ETFs have lower fees than mutual funds; neither is directly related to adviser fees), toxic assets, CMOs, balloon mortgages and possibly management fees and carried interest. These are related concepts inasmuch as they’re all financial terms.
      - Joel_Mckay 2y ago
        You seem confused by my frustration with tools towing the company line rather than providing reliable investment advice. Personally, I prefer retaining the option to sue people that pull stunts. But to each their own... =3
        JumpCrisscross 2y ago
        > I prefer retaining the option to sue people that pull stunts If that's an option for you, sure. I work in finance and retain FINRA arbitration as a customer. When I'm signing with clients, I do not like to include it--I have a strong advantage in court and don't want a venue that's biased against me as a professional. All of this is totally irrelevant to ETFs, mutual funds and CMOs because those are distributed funds whose terms aren't negotiable after offering. (If you're worrying about suing the guy selling you ETFs, you're doing something wrong. Probably overtrading.)
        Joel_Mckay 2y ago
        [flagged]
        JumpCrisscross 2y ago
        > having a robust legal position is still rather important Zero competent securities lawyers will argue waiving FINRA arbitration universally puts one into a more robust legal position. For most Americans, it waives significant consumer safeguards and opens up realms of litigation tactics that are barred by industry rules but not law.
- nradov 2y ago
  You seem to be confused about finance. There is no particular connection between a fund's risk and tax exposure, and whether it is exchange tradable or not. Some regular mutual funds are very low risk. Some ETFs are very high risk. Tax exposure is largely irrelevant for 401(k), IRA, and other tax-free retirement accounts.
  - JumpCrisscross 2y ago
    > no particular connection between a fund's risk and tax exposure They seem to be posting a lot of word-salad comments, but assuming good faith, they're saying these are separate downsides of mutual funds over ETFs. Mutual funds trade on your behalf, like an ETF, but they pass through the gains and losses. That can be painful if they realise those gains when you'd rather not have them, or crystallise losses when you don't have offsets. In this, they're correct. On risk, they're wrong--you can stuff nonsense into ETFs as comfortably as mutual funds. What they're indirectly criticising here is active versus passive management, which is its own can of worms. The only advantage of a mutual fund over an ETF is it provides friction to trading. Otherwise, they're a vestige from the cusp of computerised portfolio management. (If you have more than ~$1 to 10mm, you should be rolling your own portfolio in most cases.)
    - Joel_Mckay 2y ago
      This account posts a lot of off-topic straw-man arguments, and wild context guesses like regular bot slop. My issue with bank-fool recommend mutual funds is primarily they are often a self-serving structured product. i.e. the odds a sucker never sees a consistent behavior is far greater than random chance, and a unconstrained arbitrary guess of a chicken would likely perform better in the markets. Best of luck, =3
      - JumpCrisscross 2y ago
        > bank-fool recommend mutual funds…the odds a sucker never sees a consistent behavior is far greater than random chance Again, you’re criticising active management in general. (And seem to be mixing up alpha and tracking error. Passively-managed funds aren’t aiming to outperform the market.) There is no evidence actively-managed ETFs (or hedge funds, for that matter) outperform actively-managed mutual funds. There is also not a material difference in tracking error between their passive products. ETFs are a retail product. Like mutual funds. Make financial decisions based on the product, not the wrapper. (Also, where in the fuck does one go to get mutual funds in 2025 anyway?!)

throwaway2037 2y ago

Do 401k plans allow people to buy single stocks? I never saw it in my experience. I cannot believe that would be considered "prudent" by financial regulators. However, when you leave a company you can "roll-over" your 401k into an IRA, then you can go wild and buy anything that you want (IBRK allows it).

bdangubic 2y ago
i401k’s which you have to manage yourself if you are a contractor allow you to purchase whatever you want depending on where your account is. I was with Vanguard and they do not allow it - I moved my account to etrade and now my 401k account is basically like my brokerage account, I can buy whatever I want.