Why ETFs can be dangerous for stocks as well as also also investors

The rise of exchange-traded funds has made entire groups of stocks “nothing nevertheless chits in a bizarre game of stock market roulette,” CNBC’s Jim Cramer said Thursday.

“The FANG stocks — Facebook, Amazon, Netflix as well as also also Google, today Alphabet — are in 10 different ETFs, so on any given day, their movements tend to be driven by the action from the ETFs as well as also also not the additional way around,” the “Mad Money” host said. “The tail can be wagging the dog.”

as well as also also, unfortunately, “FANG’s not even the worst of This specific,” Cramer said. He warned of certain “hidden” ETFs of which try to mirror the actions of portfolio managers, using derivative instruments to make bets on professional investors’ bets.

Calling those funds “totally abusive, moronic, horrible,” Cramer said big companies whose stocks appear in those ETFs should bring a case against “ETF peddlers” as a way to solve the potentially harmful trend.

“At the end of the day, these ETFs can be very useful for day traders, nevertheless normal investors pay a terrible cost because This specific makes the whole business of stock picking much more difficult, as well as also also, … yes, far more futile than This specific should be,” he said.

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