written by reader Are ETFs safe in a doomsday scenario?

By rjpizza, July 11, 2020

I heard that “stocks only go up.” Ha ha. And so does the dollar. But what if? What if we experience rapid inflation, banks get into trouble, financial markets take a steep dive… you know, the doomsday stuff. I saw mentioned somewhere that ETFs are not safe in that environment. I guess they’re implying you should buy gold and bury it in your back yard.

But here’s a slightly more grounded question: In that environment, are stocks safer than ETFs of stocks? I’m hoping to read more than just guesses… Thanks!

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Travis Johnson, Stock Gumshoerjpizza Recent comment authors

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Travis Johnson, Stock Gumshoe

Stocks usually go up over long periods of time, but they have occasionally gone down for even as long as a decade. The dollar goes down over long periods of time. As for ETFs vs. owning the underlying stocks, I would focus your worry elsewhere. In the very short term it is quite possible for either class to do worse if there’s a violent disruption in the market, but that should be very temporary — I’d be shocked if it occurred for more than a day. ETFs are maintained at NAV primarily through the mechanism of redemption — large institutions… Read More »