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A roundup of what The Globe and Mail's market strategist Scott Barlow is reading today on the Web

Fees are a big and important reason for the proliferation of ETFs, but the structure was also supposed to conform to financial research showing that passive "buy and forget" index investing generated much higher returns than individual stock investments.

As Josh Brown of Ritholtz Wealth Management points out, it hasn't worked out that way – investors are using ETFs to trade themselves into losses, just like always,

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"Passive products, ironically, have become well established as ubiquitous trading vehicles over the last two decades. Tallying up ETF assets and concluding that there's been a behavioral revolution would be a major mistake. Everyone's calmly passive until their experience their first 10% loss. The net flow figures out of SPY last week are bonkers. And I think they go a long way to illustrate how foolish it is to use the terms passive and index funds interchangeably. "

In summary, "investors" trading index ETFs are doing it wrong.

"Passive My [Butt]" – Reformed Broker

"ETFs may actually make weak players weaker" - Econompic (2016)

"Everyone is wrong on the internet, stock market returns edition" – FT Alphaville

"Active Funds Shone in Selloff, Just Like They Said They Would" – Bloomberg


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Speculative investors are positioned extremely bullishly in oil futures markets, but every story I've seen about global crude supply warns of a big wall of new U.S. shale supply,

"OPEC's strategy could be backfiring, as the increase in prices to a three-year high stimulates more supply from America. U.S. output will soon surpass that of the cartel's biggest producer, Saudi Arabia, and may overtake Russia as global leader by the end of the year, according to the IEA.

'With the surplus having shrunk so dramatically, the success of the output agreement might be close to hand,' said the Paris-based agency, which advises most of the world's major economies. Nevertheless, the 'main message' remains that 'fast-rising production in non-OPEC countries, led by the U.S., is likely to grow more than demand.'"

An unwind of speculative futures positions would not, at least temporarily, be good for investors in the energy sector.

"IEA Says OPEC Almost Cleared Oil Glut But Shale Risk Looms" – Bloomberg

"You Call That an Oil Sell-Off?" – Gadfly

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"Fast-rising oil supply may overtake demand growth in 2018 – IEA" – Reuters

"OMR: History repeating itself?" – International Energy Agency


A prominent U.S. fund manager is warning that "the next crack in the financial architecture" is likely U.S. public pension funds,

"'If you were going to look for what's the possible real crack in the financial architecture for the next crisis, rather than looking in the rearview mirror, pension funds would be on our list,' Hunt said Friday in an interview. Pressure on municipalities and states will intensify in a downturn when local tax revenues decline and unemployment worsens, he said. 'So we're worried about those pension obligations.'"

"Next Crisis in Finance May Be Public Pensions, $1.2 Trillion Asset Manager Says" – Bloomberg

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Tweet of the day: "@C_Barraud As a reminder, yesterday, #PBoC data showed #China's new yuan-denominated loans hit CNY2.9Trn in January (a record high)." – Twitter

Diversion: "How The Hubris Of Man Turned The New York City Subway Into Wet Trash" – Jalopnik

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