“Ultimately, E.T.F.’s are just another tool that should be evaluated alongside all of the other tools available to help you reach your goals,” Richards wrote. “To be clear, I’m not saying that all E.T.F.’s are bad. What I am saying is E.T.F.’s alone won’t solve our most vexing investing problem: our own behavior. In fact, they might just make it easier to behave badly.”
Here at ETF Trends, we try take human behavior out of the mix. Instead of relying on our fight-or-flight primal instincts, investors should adhere to a strict investment strategy to maintain clear exit and entry points. Specifically, we have a trend following strategy centered around the 200-day exponential moving average. When the trends cross over, we are in, and when the trends go out of favor, we know it is time to exit. [An ETF Trend-Following Plan for All Seasons]
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.