Even though his holdings were in accordance with our long-term investment approach via trend tacking, the client couldn’t help but watch the minute-by-minute ETF price changes on his favorite financial site—every day. He simply couldn’t control himself and finally asked me to sell the ETFs and replace them with equivalent no load funds.
I was reminded of this when I read a story on the Motley Fool website what Warren Buffett thinks about ETFs. Seems like he has some concerns in that most people may tend to become traders rather than remain investors with a long-term goal in mind.
Additionally, he fears that investors may face pressure from their brokers, who benefit from any kind of trading activity.
The bottom line is that ETFs are a great tool and here to stay, however, they still need to be used appropriately so that they can peacefully co-exist with your long-term goals.