ETFs have never been more popular (when someone is saying that about an investment, beware).
So, let’s look at what ETF investing is.
Investing in a portfolio of ETFs means you own very small proportions of potentially thousands of stocks. Why do you own certain stocks, and not other ones? Because they are part of an index that the ETF attempts to track. Good businesses and not so good ones. Cheap ones along with expensively valued ones.
We think that if we told a client we were going to buy them our 1,000 best ideas, he or she might start laughing.
So, we take a different approach. For stock portfolios, we seek to buy a selected group of what we see as good businesses and we are careful about how much we pay for them. In our view, we end up with a diversified approach without overdoing it.
There are many ways to succeed at investing, but this approach makes the most sense to us.