(Those on the edge of your seats… this post accidentally set for 10:30 PM… such the delayed email today… carry on)
Working on the Q2 Newsletter and with a fabulous article about ETF’s (Exchange Traded Fund) in the making, as promised from last week, wanted to share in short version, here in this format, in advance….
ETF Index SPY is Born
This first Index ETF, traded (s) on the exchanges as SPY can be purchased just like a stock, during market hours and even after market hours in the much less stable and liquid extended market hours. Today just like when it was established, trades at 1/100 of the actual index value. I.e. Index 3300, SPY 330.
This Index ETF allowed investors the ability to purchase one asset, under the ticker SPY, just like an individual stock, but hold 500 stocks, in this case the Standard and Poor’s 500, generally known as the largest US public companies in the world all at once and have throughout the day ability to buy or sell.
Prior to the SPY, there were certainly Mutual Funds (and still are today) that represent the same index, but were only tradable at the end of each day, also called end of day settlement.
In an ever faster moving world, the ETF has gaining appeal and continued money flows through low cost purchase.
Time Flies When We Are Having Fun – National Quote 1.5 Decade Ago Still Pertinent
Oddly, the following quote in 2006, actually still hits to the heart of an important topic of this article today…
Managers Look Ahead To Era Of Rate Declines
BY MURRAY COLEMAN
INVESTOR’S BUSINESS DAILY
“The interim period while we’re not raising or lowering rates is a time to build ETF watch lists,” said John Kvale, a Dallas- based adviser. “If it’s a soft landing for the economy, then our belief is that we’ll gravitate much more toward higher-quality stock funds.” He’s moving clients away from small-cap ETFs. The funds he favors now include S&P 500 tracker SPDRs. (SPY) “We’re holding off right now on investing in more sector-specific ETFs,” Kvale said.
Fast Forward to the Growth of ETF’s
From Ishares/Black Rock and Visual Capitalist
As long as there is demand, Wall Street will Build!
Next up, beginnings of Danger!
Have a Great “ETF Creation” Day!
John A. Kvale CFA, CFP
February 2020 Podcast Video, Financial Planning and Capital Market Update – By John Kvale
Hello and Welcome to our February 2020 Financial Planning and Capital Market Update!
If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!
We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!
Hope you enjoy!
February – 2020 Video
Financial Planning Tip (s) –
All About the ETF (Exchange Traded Fund)
In an abbreviated three part series, a preview to our extended Q2 Newsletter Article, we discuss the origination of the very first Index ETF called SPY nick named the Spider and then the proliferation, and finally in part 3 of our series the dangers of non liquid ETF’s during stress,… never knowing stressful times were just around the corner.
Here are links to each post:
Capital Market Comments
This is a year to date graph of the S&P 500, Dow Jones and the Russell 2000 (Small Companies) indexes.
A silly but true Wall Street Saying comes to mind…
We left a different chart off because it looks more dramatic and there is enough drama around the Virus and Market Reactions.
Couple of Interesting Statistics for you to keep the perspective
Possible Chance – All time 10 Year Treasury Low
The chart below is of the 10 year treasury yield, which loosely correlates to Mortgage rates…
This is an all time low!
We would wait a little before actually taking action, as the swift movement down in rates is likely not reflected yet- but get ready….
Touch base with your Mortgage Professional or us –
Consider Lowering and Locking any fixed rate mortgages or loans!
Here is a Detailed Article on our Thoughts
Have a Great Day – Talk to you at the end of March!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
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Posted in General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments, Monthly Review, Podcast, Video
Tagged 10 Year Treasury, Corona Virus, ETF, Index Returns, Spider, SPY