Getting Started in Exchange Traded Funds (ETFs)

Getting Started in Exchange Traded Funds (ETFs) tells you what you need to know. It shows you how ETFs are created. It dissects risk. It points out what to look for when you are considering buying an ETF. It explains the different styles of ETFs and how the different styles have fared over the years. It gives you a quick guide to futures contracts on ETFs. Same for put and call options on ETFs.

Introduction:

There are several possible uses for ETFs:

• A broad-based ETF can be employed as the core of a portfolio; a foundation for other, shorter term, more risky pursuits under-taken in an attempt to increase returns. The ETF helps ensure that the portfolio’s overall performance does not differ markedly from the investor’s long-term goals.
• An ETF can be used as a temporary parking spot for cash. It is freely bought and sold for nominal transaction costs.
• If you want to set a certain investment benchmark—e.g., a diverse portfolio of midcap value stocks—it is much more convenient and less costly to buy, say, the iShares Russell Midcap Value Index Fund than to sort through and buy a large number of individual stocks.
• A broad-based ETF can be used for short-term trading. It is liquid, and its diversity virtually eliminates any unpleasant surprises resulting from single-stock risk.
• ETFs enable you to participate in markets that might not otherwise be available to you, such as foreign stocks or commodities.

In this book, We show you several ways to forecast ETF prices. We demonstrate how to use ETFs for hedging. We also provide you with help for day-to-day buying and selling; such as, what kind of order to use in a given market situation, how to deal with an unrealized loss, the safest way to add to a winning position. Online access and single-digit trading commissions have made very short-term trading feasible. If you are interested in traveling in the fast lane, we’ll show you how to start your engine.

You’ll find this book very easy to read. There’s little theory, no jargon, and only a sprinkling of math. Sentences are short and sweet, and there are plenty of everyday examples to make sure that you understand. When you’ve finished reading, you’ll be able to approach the subject of exchange-traded funds with confidence.

This book is written from the point of view of a trader, by one who was a member and floor broker on the Chicago Board Options Exchange for a number of years. When it comes time for you to find a suitable ETF, the trail begins in Chapter 15, which lists the ETFs and the indexes that they track. The next stop is Chapter 16, where you’ll find a description of the index behind the ETF. If you still like what you see, Appendix A contains a mini-prospectus for almost every ETF traded today, arranged alphabetically by trading symbol.

Contents:

• A Seagull’s View of an Exchange-Traded Fund
• The Genealogy of the Exchange-Traded Fund
• Mustering a Retirement Fund
• How Exchange-Traded Funds Are Created
• Shopping for an Exchange-Traded Fund
• Pork Bellies Don’t Fit in a Safe Deposit Box
• Position Management
• Price Forecasting Using Fundamental Analysis
• Technical Analysis
• The Tuesday Investors
• Futures Contracts on Exchange-Traded Funds
• Options on Exchange-Traded Funds
• Day Trading
• A Very Short Word about Taxes
• An ETF Menu
• The Underlying Indexes

Getting Started in Exchange Traded Funds (ETFs) By Todd Lofton pdf