FYI: ETFs investors are blindly buying into the tech bubble, causing the tech bubble to inflate further. When the bubble inevitably bursts, ETF investors, who gained so richly as the bubble inflated, will be the first feel the burn, a provocative new white paper has claimed.
Most ETFs are market capitalisation weighted, meaning they buy companies based on how big they are (their market weight). But during bubbles, it tends to be precisely the big companies that become most heavily overvalued, as investors get too excited about their growth potential.
As ETFs mostly buy big companies and do nothing to weed out overvalued stocks, they are uniquely badly positioned for the coming tech correction, the paper argued.
Regards,
Ted
http://www.etfstream.com/news/5149_etf-investors-are-sheep-to-the-tech-bubble-slaughter-montgomery
