Speaker 1: You're listening to a shares these podcast it sounds like
Speaker 1: you and the Motley Full community. You're the classic active investors.
Speaker 1: You are really getting in there into the weeds. You're
Speaker 1: looking closely at what each company's performing. We've seen obviously
Speaker 1: a trend towards automatic diversity. Is the word I'm looking
Speaker 1: for here products like ETFs. I mean, is that is
Speaker 1: that reducing the risk or would you say there's some
Speaker 1: sort of concentration risk building up there that people need
Speaker 1: to be careful of there when there when they're buying
Speaker 1: those kinds of products.
Speaker 2: Now, I love passive ETFs. I'm an active investor just
Speaker 2: I have a stockpicker. I don't mean active by the
Speaker 2: way it's active.
Speaker 3: I there's active, right.
Speaker 2: I'm not an active trader. I don't buy so by
Speaker 2: cell by cell. I'm active in the sense that I'm
Speaker 2: trying to find companies that I think.
Speaker 3: Will beat the index.
Speaker 2: If I buy company X, I buy it so I
Speaker 2: think at five years time it'll be worth more and
Speaker 2: hopefully grow faster than the market.
Speaker 3: That's my version of active. But I love passive investing.
Speaker 2: You see the fund man is out there, by the way,
Speaker 2: the ETFs are destroying the market.
Speaker 3: Absolute rubbish, complete and other nonsense.
Speaker 2: Passive ETFs are wonderful, wonderful, wonderful things. Just they are
Speaker 2: right mean less business for me, so be it. Investors
Speaker 2: are much better off than they were because a massive
Speaker 2: range of passive ETFs are available. A couple things to
Speaker 2: answer your question. Firstly, not all ETFs are the same.
Speaker 2: Now your viewers know that I really, really really dislike
Speaker 2: thematic ETFs, not because individually some of them can't do well,
Speaker 2: but because they're sold as panaceas AI is going to
Speaker 2: be huge. Here's my AIETF, and the invitation is to
Speaker 2: say AI is big, therefore AA ETFs are big, therefore
Speaker 2: I should buy the ATF.
Speaker 3: Couldn't be further from the truth.
Speaker 2: So I despise thematic ets because of the way they're sold,
Speaker 2: and get out to anyone's selling ETFs out there.
Speaker 3: I love the plane Vanilla index based.
Speaker 2: Low cost ETFs, the Jack Bogul Vanguard style ETFs ASX
Speaker 2: two hundred or three hundred s and P five hundred
Speaker 2: m SCI global. Those are the great great gray ETFs
Speaker 2: because they are low cost, because they track the index.
Speaker 3: They're not trying to make bets.
Speaker 2: They're not trying to get you to make a bet
Speaker 2: on AI or robotics or lithium or bitcoin.
Speaker 1: Or goal even with the concentration you're getting from Meg Siven,
Speaker 1: I mean the Meg seven companies. Some of those companies
Speaker 1: are bigger than entire sectors. Now you know, I'm pretty
Speaker 1: sure if you edit up with the healthcare sectors or
Speaker 1: the you know, some parts of the industrials, and you
Speaker 1: go to the EU see kind of r.
Speaker 2: So yes, absolutely, and you ask about diversification of concentrations.
Speaker 2: So I'm not saying don't pick individual socks. What I'm
Speaker 2: saying is ETFs are a great based re portfolio. And
Speaker 2: anyone who said to.
Speaker 3: Me is this enough? I say, yes absolutely. Do you
Speaker 3: think do I think you do better by picking stocks? Yes? Absolutely?
Speaker 3: But is that enough?
Speaker 2: If you're young enough, if you had regularly to a
Speaker 2: handful of diversified, indext based ETFs, you'll retire very, very
Speaker 2: very comfortably and be very happy you did.
Speaker 3: I have no doubt.
Speaker 2: If I can't make promise, I'm not allowed to, but
Speaker 2: I have no doubt you'll be very happy with what
Speaker 2: you did.
Speaker 3: Right, So back to your.
Speaker 2: Point about concentration, I wouldn't just own a US ETF,
Speaker 2: same as I wouldn't just known asx CTF because we've got.
Speaker 3: Index four banks and minors.
Speaker 2: But if I had a global ETF or a range
Speaker 2: of etfsx three hundred, you might have a developing market.
Speaker 3: You might have an emerging developed markets. If you got that.
Speaker 2: Diversification by currency, by geography, by industry, then yeah, you
Speaker 2: start to put together a portfoliot that it is diversified.
Speaker 3: Here's the other thing. When you buy an ETF, don't
Speaker 3: just put money in a ETF once and be done
Speaker 3: with it.
Speaker 2: If your dollar cost averaging adding regularly, maybe in hindsight
Speaker 2: we say, you know what, September twenty twenty five was
Speaker 2: a massive bubble.
Speaker 3: But if you've been adding monthly over.
Speaker 2: The last year, two years, five years, ten years, add
Speaker 2: all that up. People say to me sometimes, oh, the
Speaker 2: MAC hasn't recovered from the highs of twenty two thousand
Speaker 2: and seven, or it's not as high as it was
Speaker 2: in whatever. If you'd only bought chairs on that day,
Speaker 2: maybe I'll talk to you about it.
Speaker 3: But if you did, you are the unluckiest person in
Speaker 3: the world.
Speaker 2: If you'd have been buying every month for the three
Speaker 2: years before and the three years after you are up
Speaker 2: massively on that point.
Speaker 3: So is it diversified.
Speaker 2: Yes, If you buy one ETF for one index and
Speaker 2: you buy it once, you're absolutely rolling the dice. I
Speaker 2: still think you'll do very well, by the way, but
Speaker 2: maybe not as well if the market was lower.
Speaker 3: If you're adding regularly to a range of ETFs, and.
Speaker 2: You're adding to that regularly every payday or every month
Speaker 2: or every quarter over five, ten, fifteen years, I mean,
Speaker 2: think about it. If you do it every month fifteen years,
Speaker 2: what's that If you've made one hundred and eighty different
Speaker 2: transactions over that period of time, have.
Speaker 3: You bought one of those is going to be at
Speaker 3: a bubble? Probably, one of those is probably going to
Speaker 3: be at an absolute low.
Speaker 2: Low, most somewhere in between. But overall, I'll go back
Speaker 2: to the van Get index chart. I know your viewers
Speaker 2: have seen it a million times. Google Vanguard indext chart.
Speaker 3: If you don't know what I'm talking about.
Speaker 2: Yes, you might have brought it two thousand and seven
Speaker 2: at the peak, then you brought in two thousand and
Speaker 2: nine at the trough. You might have brought it ninety
Speaker 2: ninety nine at the peak, and then at two thousand
Speaker 2: and one in the trough. You're probably bought in twenty
Speaker 2: twenty March twenty twenty at the peak, and then again
Speaker 2: in April twenty twenty in the trough, and where are
Speaker 2: we at record highs. Sometimes you'll buy at high prices,
Speaker 2: sometimes at low prices. I'd love to know which ones
Speaker 2: will which side can not do it, but you can
Speaker 2: only do that in hindsight.
Speaker 3: And in hindsight, by the way, where at record highs
Speaker 3: every point before that was worth buying SHT.
Speaker 1: And visting involves the resk, you might lose the money
Speaker 1: you start with.
Speaker 2: We recommend talking to a licensed financial advisor.
Speaker 1: We also recommend reading product disclosure documents before deciding to invest.