Stocks aren’t “safe” and their prices can never be certain. But ETF managers make you think otherwise. Just as the investors one generation-ago were told virtues of bonds as a safe heaven.
Retirement funds today are struggling to find yields and looking for alternatives, at times which could prove to be very wrong, for investors’ future financial goals.
Passive investment vehicles – ETFs – often perceived “safe” must buy stocks when the net money flow is positive without any regard for valuation pushing prices higher. The opposite can become true — putting all stock investors at risk – at the first sign of danger when the net money flow is negative and the fund managers must sell stocks, amplifying price declines.
Considering every “buy-the-dip” as “safe”, passive investors in those ETFs may see ruining effect of rising volatility.