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Lessons from the biggest ETF show on Earth

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By the time you are the world’s biggest event in a fast-growing sub-segment from the financial industry, people give consideration.

That was certainly the case with ETF.com’s Inside ETFs conference, that I’ve just returned.

There were a number of key takeaways.

One is that while everyone loves to worry – it makes them look seasoned, frugal, and smart – frequently that worry is misplaced.

Professor Jeremy Siegel did a great job of debunking the strength of Shiller’s CAPE Ratio, which puts the P/E ratio in the context of the prior ten years and that has shows U.S. markets in above- average territory.

Siegel’s conclusion was that no, U.S. markets aren’t widely overpriced.

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    Another important lesson was that emerging markets may or may not emerge. The quote to keep in mind on this subject: “Emerging markets are markets you cannot leave in an emergency.”

    There were a lot more, to be certain, throughout four days – but two more have profound implications, when extrapolating them into a changing world of regulation and disclosure in Canada:

    The first: Never underestimate the strength of free. (You would be surprised what individuals would do for a free coffee card)

    The second: Behaviours could be altered. With compelling clarity and transparency, change can materialize, and compliance can reach previously hard-to-dream-of levels.

    The implications for those is that while 2015 marked the 25th anniversary for ETFs, 2016 – despite, and perhaps even helped by more challenging markets – could be their true breakout year in Canada. And you know what? Are they ready? Yes. Are you?

    As a final note, here are the top five quotes from Inside ETFs, as relayed by Bloomberg ETF analyst Eric Balchunas:

    1. “What are these folks doing?”- New Bond King Jeffrey Gundlach’s undertake the FED’s December rate hike.

    2. “Don’t let them push us Into the Darkness!” – Factset Research System’s director of ETFs Dave Nadig, worrying that ill-conceived regulatory changes might have devastating implications.

    3. “We actually Are a classic Industry, Second Simply to Wal-Mart Greeters” – Ritholtz Wealth CEO Josh Brown, suggesting financial advisors, who have an average age of 50.9, make use of social networking to remain relevant

    4. “Everything Blows up every 7 years”  – Mr. Wonderful Kevin O’Leary on why he effectively is all-in the “Smart Beta” phenomenon, looking to ride his factors – quality, yield and low volume – to a Mr. ETF status via his U.S. listed O’Shares.

    5. “A Pool Filled with Beer could be the only answer” – Boom Doom and Gloom’s Marc Faber, an esteemed compatriot of mine (no, not Canadian, Swiss), who captures very well here the sentiment shared by many people a specialist advisor or investor after January’s wild ride.

    Yves Rebetez is managing director of ETFinsight.

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