I often jest that the financial world is moving towards a world of total ETF-ification.
Meaning, that with the huge popularity of Exchange Traded Funds in today’s financial markets, that market makers are only limited by their imagination, and their creative accounting skills, at what assets, commodities or random grouping of equities they can throw together and slap an ETF label on it.
Granted, I think the chances of these fictional ETFs ever coming to fruition are slim to none, just like my suggestions for appropriately named ETF ticker symbols, but nonetheless, I think a few of these ETFs could actually serve a legit purpose and allow money managers to hedge their bets adequately or invest in specific niches that do not currently exist.
New Ideas for ETFs (that will probably never exist)
- Real Estate Markets by City. How convenient would it be for real estate investors to have the ability to go long San Francisco real estate because of innovation and growth centers like Silicon Valley, or shorting New Orleans real estate when Katrina II hits. These would also be perfect for those lazy real estate investors (like me) who want a steady income stream from specific real estate markets they know well or want to trade because of specific geographic economic phenomena (e.g. BP oil spill slamming Gulf Coast real estate).
- Companies Who Received Taxpayer Bailout Money. It’s an old idea, but any company that’s still alive because it got a “you’re immune from evolution” card courtesy of the American taxpayer should be aggregated and traded just like any other Plain Jane, index based ETF. Since they don’t have to exist by the same rules as everyone else, and they’re definitely too big (important) to fail, perhaps they should be given a separate index all their own.
- Companies Who Are Borrowing from the Federal Reserve’s Discount Window. If financial institutions are borrowing money from the taxpayer, via the Federal Reserve’s Discount Window, then making money on the spread (in interest rates) by lending the taxpayer back his money, then these companies should be identified and grouped together (e.g. true cost of the bailout). These corporations have such an excellent, socialism based business model, that they would make perfect investments for the risk averse investor.
- Corporations Who Contribute Greater Than $1 Million to Political Campaigns. Theory here is pretty simple: those who spend money to buy enough politicians (and the all important persuasioneers, a.k.a. lobbyists), will write the laws in their favor, and have the ability to make money over the long term. Never bet against the people who can change the rules in their favor anytime they wish.
- Growing Big Government. Somehow, there has to be an accurate method of quantifying the growing budget of the so called “big government”. Just like any other growth loving investor, I want to have the ability to buy into anything that’s showing positive growth on it’s balance sheet… regardless of what it is.
Got an idea for a new ETF? Share it below.
Photo by koalazymonkey