In 1993, several sponsors introduced exchange-traded index funds (ETFs). Most notably, investors had access to the S&P 500 tracker, SPY, as well as the NASDAQ 100 proxy, QQQ. Yet for 7-8 years after inception, financial professionals and the investment community largely ignored the innovative vehicles.
In truth, most financial educators, mutual fund families and money managers preferred to get paid for buying-n-holding a portfolio. An overwhelming majority hated the idea of an “index fund that trades like a stock.” After all, if you’re going to buy a diversified asset, why would you ever need to sell it in the middle of the trading day?
On the other hand, there were a number of forward-thinkers who recognized a burgeoning revolution. Gary Gordon was one of the most outspoken ETF advocates. He explained to e-list readers and later, radio show listeners, the critical importance of liquidity; that is, there are times when an investor needs to be able to convert an asset to cash quickly.
Individual stocks with sufficient volume could be converted at any point in a trading session. Yet individual stocks lacked the inherent diversification of mutual funds. Meanwhile, mutual funds often had redemption penalties for selling them within a 6-month time period and they were priced only once at the end of the day… after a big-time index like the Dow Industrials might crash 500 points or more.
In 1993, there may only have been a mere handful of ETFs. By 2003, after 3 years of excruciating stock market losses, there were several hundred ETFs. Not surprisingly, Gary Gordon soon became a well-known speaker on the power of indexing and the importance of liquidity… all through the use of this newfangled type of index fund.
As a radio personality, Gary often presented at small ETF seminars in different radio markets around the country. However, as ETFs grew from a few hundred in 2003 to well over 1600 in 2014, Gary Gordon now presents at annual ETF conferences. They have included, but are not limited to: