A Comment on All-ETF Portfolios

by: Roger Nusbaum

I had a comment left on my earlier post about oil by Marty, writes Roger Nusbaum. First, thanks for the kind word. The thing I want to focus on from Marty is this:

As to your comments on oil, I agree with you but I must admit I sold 6000 shares xle as Schwab feels its time for a temporary breather on that oil etf. I'm no day traider but I put in a limit but at 5% below my sell and hopefully get back in. Actually I felt bad about my sell as I really think xle will gain over 10% a year over the coming years. Hope my greed didn't screw me up. Xle is up today.

I'm not sure of the totality of the situation here but I have to wonder about the advice Marty got. I don't know if 6000 XLE was his entire position in the energy sector. If it was then I have to say I can not fathom a suggestion that would tell a client to go to zero in one of the S+P groups. Also assuming Marty has a diversified portfolio (and maybe he doesn't) the size position that Schwab put him into is baffling. If 6000 shares at $48 is 10% or 15% of the portfolio, he obviously has a large portfolio, large enough that there should be some individual stocks mixed in. Let me be clear, as I read the comment, Marty is paying for advice from Schwab.

If you have a lot of money and you are paying for advice I think you should be getting more than just ETFs.

I have made quite a few assumptions about Marty's situation and they could all be wrong. Assuming I do have all the facts upside down, this last sentence is still the important thing here. Professionally managed all ETF portfolios are not necessarily appropriate for large portfolios. As a tool ETFs have a place in every situation I can think of but if you are going to hire a firm I hope you really examine what you are paying for and do some comparison shopping.

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