ETFs vs. STOCKS question.

[GlenQuagmire]

Can you buy and sell ETFs exactly like you do stocks (though ETFs are funds)? Other than ETFs going up when the market is going down or is already down, can you advise any pros and cons about ETFs? :confused:

Lastly, when comes to profits made on ETFs, is there anything tricky or sticky about declaring ETFs profits (income) on your taxes vs. profits (income) made on stocks? :confused:

Glen

[aiki14]

Can you buy and sell ETFs exactly like you do stocks (though ETFs are funds)? Other than ETFs going up when the market is going down or is already down, can you advise any pros and cons about ETFs? :confused:

Lastly, when comes to profits made on ETFs, is there anything tricky or sticky about declaring ETFs profits (income) on your taxes vs. profits (income) made on stocks? :confused:

Glen


Glen, You can buy ETF's the same way as stocks. Also ETF's track an underlying group of stocks, and can be leveraged (2 to 1 as in the Ultra's), or not, or they can be inverse or short (When the stocks go down they go up). While lately all the talk has been about ETF's that track the inverse of a group of stocks (SKF and QID are examples of the leveraged and unleveraged inverse ETF's) ETF's can also track the underlying stocks straight (UYG and XLF are examples of leveraged and unleveraged long ETF"S).

As ETF's can contain dividend paying stocks there may be dividend payouts, and capital gains if the fund has to rebalance or the underlying index changes composition. And the long term versus short term gains apply as if they were a stock.

This may be of help:
http://www.smartmoney.com/etf-focus/index.cfm?story=20080117-etf-tax-advantage

[LongArm]

As to the taxation part, be aware that some commodity ETFs--the ones that invest in commodity futures--tax you each and every year, whether you sell or not.

Also, ETFs such as GLD and SLV are taxed as collectibles, meaning the long-term rate can be as high as 28%.

[GlenQuagmire]

Thanks Aiki14 and Longarm! I greatly appreciate your help very much, and you two have certainly provided me a lot of food for thought. Thanks again! :top::top:

Glen