News for hackers. Stuff that matters.

A comment on Why is the stock market rallying when the economy is so bad?. Parent comment

Re:Why is the stock market rallying when the economy is so bad? by treyfitty on Sunday May 10, 2020 @07:05PM (#23137146)
Can you define what this bifurcation in ETFs look like? I can’t grasp how this situation will crumble the ETF market- aren’t ETFs in theory safer than stocks?
[ Parent | on HN ]
Re:Why is the stock market rallying when the economy is so bad? by ethbro on Sunday May 10, 2020 @10:36PM (#23138373)
Happy to be corrected, but I believe it would be more accurate to say that ETFs are less volatile than stocks.

They accomplish this by bundling together like stocks, such that each's individual volatility balances out others.

This essentially allows you to buy "oil stocks" or "retail stocks" or "all large-cap US companies."

However, what goes into those buckets are any companies that meet the criteria. Hence why ETF fees are lower than actively managed mutual funds.

The downside is that you own all the companies in that bucket. If half of those companies can coronavirus-adapt and the other half cannot, is that the bucket you want to be holding?

[ Parent | on HN ]
Re:Why is the stock market rallying when the economy is so bad? by softawre on Monday May 11, 2020 @11:00AM (#23142870)
No. I want to hold the "will survive in the future" bucket. Can you sell me that ETF?
[ Parent | on HN ]