Tag Archives: ETFs for the Long Run

Introducing Paul Berry’s Audience to ETFs

I was recently interviewed about Exchange Traded Funds and my book, EFTs for the Long Run,

Buy ETFs for the Long Run from Amazon.com

Buy ETFs for the Long Run from Amazon.com

by Paul Berry on the Home and Family Finance radio show. It’s syndicated nationally on the Radio America Network. Here is the link to the replay.

Second Book Put to Bed

Whew!! Okay, I’m back on the ETF beat.

I feel like I’ve just run two marathons with very little sleep in between. I just finished the final edits and put my second book to bed. Dividend Stocks for Dummies will hit the bookstores in April. I expect I will be taking a closer look at dividend focused ETFs now.

 But in the meantime, check out my first book and the inspiration for this blog, ETFs for the Long Run.

Bell Ringing At the Nasdaq Stock Market

ETFs for the Long Run gets the royal treatment on the Nasdaq Stock Market's <br> 7-story high tower screen in Times Square. New York City.

ETFs for the Long Run gets the royal treatment on the Nasdaq Stock Market's 7-story high tower screen in Times Square. New York City.

To honor the one-year anniversary of the publication of ETFs for the Long Run, I”m a publishing the photos from my biggest media event.

My friends in and out of the ETF industry join me as I ring the Closing Bell at the Nasdaq Stock Market Aug. 19, 2008

My friends in and out of the ETF industry join me as I ring the Closing Bell at the Nasdaq Stock Market Aug. 19, 2008

Last summer, to help promote the publication of the book and in appreciation for telling the Nasdaq’s influencial part of the history of the ETF, I was invited to ring the closing bell on Aug. 19, 2008.

I've just received the Nasdaq's highly coveted blue glass award for effectively closing the market that day from Richard Keary, former managing director of Nasdaq's exchange-traded products business. Without me, people might have traded until midnight.

I've just received the Nasdaq's highly coveted blue glass award for effectively closing the market that day from Richard Keary, former managing director of Nasdaq's exchange-traded products business. Without me, people might have traded until midnight.

Why publish these now? Well, at the time this occurred I  just started the blog and didn’t have the hang of it yet. Then the financial world blew up.

My friends and I in the middle of Times Square. When the Nasdaq's behind you like this, you know this is an important book. What are you waiting for? Order a copy now.

My friends and I in the middle of Times Square. When the Nasdaq's behind you like this, you know this is an important book. What are you waiting for? Order a copy now.

A few weeks later, I had the “good fortune” to have my book hit the bookstores the week Lehman Brothers went bankrupt. At the time, people were worried about the financial collapse of the entire Western World and the coming of the second Great Depression. So, no one really wanted to celebrate a book talking up Wall Street products. But things are better now. I want a redo.  So, I’m ramping up publicity and this is the beginning.

So long, folks.

So long, folks.

Book Review of ETFs for The Long Run

Research Magazine just came out with a supplement called the Guide to ETF Investing 2009. Some great articles in there.

On page 8 of the guide is a review of my book ETFs for the Long Run. The link goes to a PDF file. The article was written by Ron DeLegge, the editor of ETFGuide.com, a great resource for ETF information. I am reprinting it here because I can’t link directly to the article.

Long-Term Thinking

Mutual funds may have enjoyed a 65-year head start, but the interest in ETF investing by individual investors and financial professionals is blossoming. Naturally, the rise of ETFs has led to a proliferation of subject material related to this still emerging investment vehicle. ETFs for the Long Run tackles this growing investment universe in a fun, readable and easy-to-comprehend manner.

The first few chapters take readers through a brief review of how ETFs came about. Nathan Most, a product developer for the Amex was instrumental in helping to launch the U.S. ETF marketplace. Most asked his development team, “Why can’t we create a warehouse receipt which would be backed by the underlying stock in the index but trade like a share of stock itself?” His question would later be answered with product prototypes that would eventually lead to the first U.S.-listed ETF in 1993, the Standard & Poor’s Depository Receipt (SPY).

Author Lawrence Carrel writes about ETFs as being a “better mousetrap.” He argues that mutual funds are inefficient from a cost standpoint: “Funds charge their shareholders for everything that goes on inside the fund, such as transaction fees, distribution charges, and transfer-agent costs.” On top of these costs, Carrel explains that there are additional charges that erode performance such as capital gain distributions. These often have the ugly habit of surprising mutual fund investors.

Timing Trouble

Remember the mutual fund timing scandal from 2003? Carrel suggests the 2003 scandal actually helped to fuel the popularity of ETFs. As you may recall, mutual funds were accused of breaking their own rules by allowing a select group of privileged investors to late-trade and market-time within their funds. On one hand, fund companies were telling investors to be long-term investors. On the other hand, these same companies were allowing hedge funds to make quick short-term profits at the expense of long-term investors. In contrast, ETFs avoided becoming tainted by the scandal because ETF investors are unaffected by the trading activity of their fellow shareholders.

ETFs for the Long Run explains the importance of building an ETF portfolio that accomplishes a logical financial mission. Carrel cites the classic 60/40 conservative portfolio which has substantially less exposure to stocks and more exposure to bonds. He suggests an equity mix using SPY, VO, IWM and EFA. For the bond position, he uses BSV, BLV, CFT and TIP. He also throws in a REIT fund (VNQ) for non-correlated market exposure.

Future Tense

Toward the end of the book, Carrel considers what the future of the ETF marketplace could become. While active ETFs have yet to make any significant impact in the business, the number of active mutual funds outnumbers that of index mutual funds. Could the same thing eventually happen with ETFs? Another area of future ETF asset growth is inside the lucrative 401(k) retirement market. Millions of 401(k) investors have no low-cost investment options or diversified choices like commodities, international bonds or REITs. Companies like Invest n Retire and WisdomTree are already aggressively pushing ETF/401(k) retirement plans. As complicated as ETF investing may sometimes seem, simplicity is often best. “The basic challenge for
the individual investor is to achieve a broadly diversified portfolio for the least amount of money,” states Carrel. This book should go a long
way to helping not just investors but top-notch financial professionals accomplish this noble objective.

Buffalo Gets Turned On to ETFs

buffalonewsfotoThe Buffalo News in Buffalo, N.Y. gave “ETFs for the Long Run” and myself a nice writeup in advance of tomorrow’s talk at the University of Buffalo. (In the photo, I’m in the blue shirt.) The News asks “Are exchange traded funds the future of investing?” on top of the fold of the paper’s business section.