By Ihor @ Adobe Stock
Today, there are three times, let me repeat, three times as many mutual funds and ETFs as there are stocks available to invest in. Spencer Jakab explains in The Wall Street Journal, “Americans have rarely been as excited about stocks as they are today and have never had as many ways to slice and dice the market cheaply, but they are ordering from a shrinking menu: There are now close to three times as many stock funds available to them as listed American companies. Even though an unprecedented 70% of the world’s stock-market value is American, including all 10 of the most valuable companies, fewer than 10% of listed companies in the world were in 2022, according to the World Bank—less than half the proportion of the late 1990s.”
For the privilege of owning one of these sliced-and-diced funds, in many cases, you also give up your right as an investor to vote your own shares, ceding that power to the fund managers. They can then pursue any politicized policies they want, using your money as leverage.
And all this market chopping and mixing leaves every fund looking the same, owning the same stocks. Like a restaurant menu with the same item listed twenty times with different food coloring added. Then in times of trouble, all those funds that all own the same stocks have trouble at once.
Action Line: You don’t want the chopped salad; you want the steak. You should own a portfolio of individual equity and fixed-income securities that you control with the help of a trusted fiduciary. When you want to talk about building a portfolio of individual securities, I’m here. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.
Originally posted on Your Survival Guy.
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