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Welcome back to Mind Over Money. I'm Kevin Cook, your field guide and story teller for the fascinating arena of behavioral economics.
Today I invited my favorite ETF expert, Neena Mishra, CFA, on the show to help us pick the best ETFs for new investors. The podcast will reveal those symbols and their place in a core investment portfolio.
Hint: they are not the ones you see linked in this article, because I want you to listen to Neena and get a grasp of her approach and analysis.
First, I have to explain how I came to believing this podcast was so important to do.
For much of 2020, I was talking frequently about a woman who "put the wood" to Wall Street with her revolutionary approach to investing where she only focused on "disruptive innovation," and concentrated her investment themes around world-changing technology platforms.
Of course, I'm talking about Cathie Wood, the founder of the unique ETF firm ARK Invest -- who I say "broke the mold" of Wall Street.
In my weekly Cook's Kitchen vlog on January 7, I produced a short video and article about her disruptive achievements and what they meant for the future of investing...
That piece describes how I fell in love with Cathie's approach after I heard she had a $7,000 price target on Tesla (TSLA - Free Report) and I sought feverishly to understood what her seemingly crazy long-term vision was all about.
And I was thrilled to find that we already had similar ideas about many long-term investing themes, industries and companies, from the CRISPR clan including Editas Medicine (EDIT - Free Report) to the AI (artificial intelligence) architects who could harness big-data with deep learning, like NVIDIA (NVDA - Free Report) .
But as challenging as 2020 was for most of us adapting to the impacts of the pandemic, I forgot to tell some very important people about my efforts to explain Cathie Wood's philosophy: my family.
In my defense, I have to personally email or text a link to something I publish just to put in on the radar of family members since they don't really pay a lot of attention to my work. I wonder if Cramer has that problem with his family...
Reddit Did It
Anyway, the one person I really started to think about was my Marine son who just got back from the Middle East in November. I had nudged him well enough when he was working after college to begin saving and investing with employer-sponsored plans. By age 25, he had more savings and larger investment returns than I did when I was 30!
And now that he was married in his mid-twenties, I wanted to expose him and his smart wife to the philosophy of "disruptive investing" to enhance the potential of their future wealth creation.
So I shared a 30-minute Cathie Wood presentation from 2019 that I've found particularly educational and have watched probably a dozen times. But the market ramped in December and also saw a furry of fund in-flows for ARK Invest as everybody started to catch on.
As much as I wanted to put them into the ARK Innovation (ARKK - Free Report) and ARK Genomics ETFs as soon as we could, I said we should wait for a pullback. Which was a little stupid of me since one of my major investing beliefs and decision-making metrics is that if you are dealing with long-term money that you won't use for 20 or 30 years, then NOW is always the right time to BEGIN a position, for which you will be focused enough to gladly add to on any corrections.
While we waited, something else happened. No not the Capitol riot. That something was the GameStop (GME - Free Report) short-covering frenzy ignited by Reddit user r/DeepF---ingValue, aka @TheRoaringKitty on Twitter.
And my Millennial son was getting very interested in the frenzy. I was worried he might actually go and buy some GME at $300 after he rolled some funds from an old 401(k) into a new IRA.
Roaring Kittens and Other Harsh Realities
Two insights are worth highlighting here. One a dose of reality, and the other a dose of optimism. First the hard reality...
1) I knew that lots of young and new traders would get burned following the crowd from WallStreetBets. There is never a reliable "revolution" on Wall Street where the little guy can consistently out-game the big short-sellers and win enough times to make it a plausible strategy. The odds are as stacked against you as taking down Vegas.
If you don't understand games of probability in the manner of long-term expected value, you are going to go broke and keep the house rich long before you figure out how to win consistently.
2) My optimistic insight is about RoaringKitty. A couple of weekends ago, I took the time to watch a few of his old YouTube videos before the frenzy started. I watched one from July 2020 where he explained in detail his bullish thesis on GME -- when it was a $4 stock.
I was very impressed with his deep fundamental analysis. As I wrote on Twitter last month: "The dude is no chat-board pumper." I further opined on Jan 30 @KevinBCook...
"Make no mistake: @TheRoaringKitty did his homework last year on $GME. Dude was a data-driven, humble and not-certain value investor who had methods & models that exercised probabilistic thinking. Hopefully his followers learn beyond the follow."
And thus it dawned on me, after my son bought some AMC on a frenzied spike higher, that it was time to lay down the law.
Not with him necessarily, but with lots of youngsters with ready cash to burn, thinking they too could become instant roaring millionaires like the Kitty. Or thinking they were part of a revolution overthrowing Wall Street.
Just this week, I heard a story on NPR about these young'ns who actually believe that holding their shares of GameStop at a loss will teach Wall Street a lesson and make the "banksters" pay for their transgressions in the 2008 financial crisis.
I don't even know where to begin unraveling that web of crazy. And so, I won't.
5 Great ETFs to Get Started on Your Wealth Creation Journey
Instead, I'm going to give you a formula for winning on Wall Street that has nothing to do with fighting the hedge funds, and everything to do with being smart, focused, and disciplined so that your savings grow multiples bigger than the average 40 or 50 year old possesses now.
And to accomplish this, we'll talk with my favorite ETF expert on the cast, Zacks Director of ETF Research Neena Mishra, who runs our ETF Investor portfolio here at Zacks. As a quantitative financial professional, she holds the CFA and FRM designations.
Neena also has a spectacular podcast called ETF Spotlight where she has interviewed close to 100 different ETF experts, from the strategists at big sponsors like BlackRock, State Street, Invesco and Vanguard to quants and analysts like Eric Balchunas, Senior ETF Analyst for Bloomberg Intelligence, and Brad Loncar, Biotech investor, index provider, and creator of two Nasdaq-listed exchange traded funds.
Be sure to listen to my discussion with Neena about all things ETF related and we'll give you our Top 5 recos for 20-30 somethings, plus a few bonus ideas.
Kevin Cook is a Senior Stock Strategist with Zacks Investment Research where he runs the TAZR Trader and Healthcare Innovators portfolios.
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5 Best ETFs for Young Investors
Welcome back to Mind Over Money. I'm Kevin Cook, your field guide and story teller for the fascinating arena of behavioral economics.
Today I invited my favorite ETF expert, Neena Mishra, CFA, on the show to help us pick the best ETFs for new investors. The podcast will reveal those symbols and their place in a core investment portfolio.
Hint: they are not the ones you see linked in this article, because I want you to listen to Neena and get a grasp of her approach and analysis.
First, I have to explain how I came to believing this podcast was so important to do.
For much of 2020, I was talking frequently about a woman who "put the wood" to Wall Street with her revolutionary approach to investing where she only focused on "disruptive innovation," and concentrated her investment themes around world-changing technology platforms.
Of course, I'm talking about Cathie Wood, the founder of the unique ETF firm ARK Invest -- who I say "broke the mold" of Wall Street.
In my weekly Cook's Kitchen vlog on January 7, I produced a short video and article about her disruptive achievements and what they meant for the future of investing...
How Cathie Put the Wood to Wall Street: TSLA, SQ, ROKU, CRSP, BIDU
That piece describes how I fell in love with Cathie's approach after I heard she had a $7,000 price target on Tesla (TSLA - Free Report) and I sought feverishly to understood what her seemingly crazy long-term vision was all about.
And I was thrilled to find that we already had similar ideas about many long-term investing themes, industries and companies, from the CRISPR clan including Editas Medicine (EDIT - Free Report) to the AI (artificial intelligence) architects who could harness big-data with deep learning, like NVIDIA (NVDA - Free Report) .
But as challenging as 2020 was for most of us adapting to the impacts of the pandemic, I forgot to tell some very important people about my efforts to explain Cathie Wood's philosophy: my family.
In my defense, I have to personally email or text a link to something I publish just to put in on the radar of family members since they don't really pay a lot of attention to my work. I wonder if Cramer has that problem with his family...
Reddit Did It
Anyway, the one person I really started to think about was my Marine son who just got back from the Middle East in November. I had nudged him well enough when he was working after college to begin saving and investing with employer-sponsored plans. By age 25, he had more savings and larger investment returns than I did when I was 30!
And now that he was married in his mid-twenties, I wanted to expose him and his smart wife to the philosophy of "disruptive investing" to enhance the potential of their future wealth creation.
So I shared a 30-minute Cathie Wood presentation from 2019 that I've found particularly educational and have watched probably a dozen times. But the market ramped in December and also saw a furry of fund in-flows for ARK Invest as everybody started to catch on.
As much as I wanted to put them into the ARK Innovation (ARKK - Free Report) and ARK Genomics ETFs as soon as we could, I said we should wait for a pullback. Which was a little stupid of me since one of my major investing beliefs and decision-making metrics is that if you are dealing with long-term money that you won't use for 20 or 30 years, then NOW is always the right time to BEGIN a position, for which you will be focused enough to gladly add to on any corrections.
While we waited, something else happened. No not the Capitol riot. That something was the GameStop (GME - Free Report) short-covering frenzy ignited by Reddit user r/DeepF---ingValue, aka @TheRoaringKitty on Twitter.
And my Millennial son was getting very interested in the frenzy. I was worried he might actually go and buy some GME at $300 after he rolled some funds from an old 401(k) into a new IRA.
Roaring Kittens and Other Harsh Realities
Two insights are worth highlighting here. One a dose of reality, and the other a dose of optimism. First the hard reality...
1) I knew that lots of young and new traders would get burned following the crowd from WallStreetBets. There is never a reliable "revolution" on Wall Street where the little guy can consistently out-game the big short-sellers and win enough times to make it a plausible strategy. The odds are as stacked against you as taking down Vegas.
If you don't understand games of probability in the manner of long-term expected value, you are going to go broke and keep the house rich long before you figure out how to win consistently.
2) My optimistic insight is about RoaringKitty. A couple of weekends ago, I took the time to watch a few of his old YouTube videos before the frenzy started. I watched one from July 2020 where he explained in detail his bullish thesis on GME -- when it was a $4 stock.
I was very impressed with his deep fundamental analysis. As I wrote on Twitter last month: "The dude is no chat-board pumper." I further opined on Jan 30 @KevinBCook...
"Make no mistake: @TheRoaringKitty did his homework last year on $GME. Dude was a data-driven, humble and not-certain value investor who had methods & models that exercised probabilistic thinking. Hopefully his followers learn beyond the follow."
And thus it dawned on me, after my son bought some AMC on a frenzied spike higher, that it was time to lay down the law.
Not with him necessarily, but with lots of youngsters with ready cash to burn, thinking they too could become instant roaring millionaires like the Kitty. Or thinking they were part of a revolution overthrowing Wall Street.
Just this week, I heard a story on NPR about these young'ns who actually believe that holding their shares of GameStop at a loss will teach Wall Street a lesson and make the "banksters" pay for their transgressions in the 2008 financial crisis.
I don't even know where to begin unraveling that web of crazy. And so, I won't.
5 Great ETFs to Get Started on Your Wealth Creation Journey
Instead, I'm going to give you a formula for winning on Wall Street that has nothing to do with fighting the hedge funds, and everything to do with being smart, focused, and disciplined so that your savings grow multiples bigger than the average 40 or 50 year old possesses now.
And to accomplish this, we'll talk with my favorite ETF expert on the cast, Zacks Director of ETF Research Neena Mishra, who runs our ETF Investor portfolio here at Zacks. As a quantitative financial professional, she holds the CFA and FRM designations.
Neena also has a spectacular podcast called ETF Spotlight where she has interviewed close to 100 different ETF experts, from the strategists at big sponsors like BlackRock, State Street, Invesco and Vanguard to quants and analysts like Eric Balchunas, Senior ETF Analyst for Bloomberg Intelligence, and Brad Loncar, Biotech investor, index provider, and creator of two Nasdaq-listed exchange traded funds.
Be sure to listen to my discussion with Neena about all things ETF related and we'll give you our Top 5 recos for 20-30 somethings, plus a few bonus ideas.
Kevin Cook is a Senior Stock Strategist with Zacks Investment Research where he runs the TAZR Trader and Healthcare Innovators portfolios.