Yup. Equity index ETFs are great tools, especially when most investors prefer picking individual stocks. However, when nearly everyone starts using equity index ETFs, they drive up the prices of all companies in the index—both good and bad—without making any distinctions between them. When the next bear market hits, the stock prices of the bad companies are likely to drop the most.
Great article on ETFs.
Yup. Equity index ETFs are great tools, especially when most investors prefer picking individual stocks. However, when nearly everyone starts using equity index ETFs, they drive up the prices of all companies in the index—both good and bad—without making any distinctions between them. When the next bear market hits, the stock prices of the bad companies are likely to drop the most.