

This weekend's Journal reports on the rational and well thought out way individual investors are using Exchange traded Funds (ETFs) to add a lot of juice to their portfolio. Now I love ETFs, they are a great way to get easy, transparent access to defined market segments, unfortunately they also allow poorly informed speculators to make silly bets on parts of the market they know little about.

Media consultant Steve Sox shares that since his mutual funds weren't "doing anything" he built a portfolio of EFTs all by himself now he "easily" outperforms market indexes. Since most ETFs track a market index, I have a feeling Steve may be taking on a little more risk than the indexes he is so easily outperforming.

Retired consultant Stan Zawrontny shares that he has committed nearly one third of his assets to a set of ETFs that focus on emerging market countries like Brazil. He tells us that "I didn't like the returns that mutual funds were getting." so he chose to carefully and rationally evaluate the geopolitical environment, inflation and economic growth scenarios and buy an ETF that tracks the market in Singapore.

While I think it is amazing that people like these guys who appear to have no related education or experience can make such complex decisions, it is good to see that the individual investor has once again found a way to beat out all of those stupid fund managers who you know, study investments all day.

In an unrelated note, Barron's also reports that margin debt hit an all time high last week, passing its previous high set in March 2000.

Looking at history and common sense, I recommend investors rush into the market immediately, preferably by buying into a sector of the stock market that they know little about but that seems like it will yield high returns.