 Good day fellow investors. I have discussed a few risks that I think are extremely important to know if you're investing now for the stock market. Those are related to the management, robbing, not having the same interest as the shareholder, leverage which is sky high and will eventually become a burden for stocks. Stock market main risk for me was the high sky high valuations which in history has never been a good thing. And I also elaborated on the Dow Jones and how valuations look on actual companies. And today will be my final risk market video and we'll discuss ETFs. And we'll discuss how ETFs are one of the biggest risks of the market. So if you put the main five risks ETFs are one of the five that I have mentioned. For those of you who don't know an ETF is an exchange traded fund. So a fund is a basket of securities and now they put them all into a stock so that you can buy a stock, you can trade it on a daily basis on the stock market but you're actually trading a fund. So that's what an ETF is. It's both a stock and both a fund. And in the last 10 years people have really, really loved the idea of ETFs because it gives them liquidity, very big risk and it gives them the diversification, the passively investing machine that doesn't care, doesn't matter what you buy as long as you buy the market you will do well. And again, another big risk. So let's dig a little bit deeper into what has been going on and how that will turn into risks or even a lot of pain for all of those who are blindly investing in ETFs and similar schemes. The first thing, look at the flow of funds. Passively managed funds and ETFs flows have been constantly positive in the last five years. And if those funds keep getting money in, it means that they have to keep buying the stocks they own and of course the stock market can go only higher. Here you can see how much ETFs have under management and you can see that it is a straight line up, similarly to the Bitcoin. So you know how the Bitcoin ended or not yet ended but probably will. So this is something very likely it will happen too. And you can see that if you compare the flow of funds with the SAP500, the higher the SAP500 is, the more people are willing to buy ETFs and passively managed index funds. So first, when somebody buys such an instrument, for me that's not sophisticated money because sophisticated money knows how to diversify better or is money very sophisticated that wants to take advantage of the trend and others that are still buying and playing on the theory of who will be the biggest fool that buys last. So if there are funds of flows constantly coming in, this goes up. What happens when those flows of cash turn around and start going down? There will be a massive sell-off because those who own ETFs do not own them because it's a long-term investment, I'm buying, I don't know, part of the American economy. No, it is okay, I'm buying part of this because it goes up and I can sell whenever I want. So if everybody owning ETFs has such an attitude, okay, I have liquidity, I can sell whenever I want, when the trend reverses, there will be a huge sell-off which creates a very, very big risk for stocks in general. 3.5 billion is a huge, huge risk because when everybody starts selling, the exit door of the theater is very, very small and to make everything go through that, you really need to push down a lot of prices. Further, fundamentals are totally forgotten, as you have seen again, the higher the PE ratio of the SAP500, the higher are the flows of cash into ETFs. Further, ETFs increase volatility, there was just an article in the Journal of Finance discussing how ETFs increase volatility of the stock included into an ETF or an index fund. This means that when something is included, it loses track of fundamentals and it starts moving with the market. As long as the market goes up, everything is okay, but when that shifts, it will be terrible and it will be terrible because there are no fundamentals to hold whatever is there because active managers are outshadowed by ETFs and those flows of cash. So there is no really thinking, there is no, okay, these are the fundamentals, these are the returns, no, we are just blindly investing and this is where the risks are piling, piling, piling and piling up. Further, ETFs are getting too big, too big for the underlying assets that they own. We have already seen the Van Ek gold mining ETF rebalance, the junior gold mining ETF rebalance because they didn't have enough securities to own without owning more than 20% of each miner, which was crazy. Further, if you know how an ETF is created, if there is more money coming in, then the ETF really has to buy the stocks on the stock exchange and then sell the ETF to you. That goes automatically, but imagine what will happen if there is a reversal. ETFs, as I said, very popular, except for commodity ETFs. They have been a negative trend since 2012 as commodity prices went down and nobody really went jumping into commodity prices. When commodity prices rise, again, people will jump into commodity prices and this is clearly the mentality of ETFs. When it goes up, everybody goes after it, like the Bitcoin, when it will go down, most will sell like crazy in panic. And that's also, when it starts falling, do you trust the people that own ETFs? Do you rely on their rationality, their stability, their strong hands, or will those be weak hands that will sell in panic like crazy? That's a risk and that's something we have to think about. Really, when I see something that mindlessly goes up over time just because it has to go up higher, higher and higher, there is a probability that it goes higher, higher and higher. But at some point, it will just crash and it will crash 10 times faster than it went up, because that's how market cycles, that is how bubbles work. Thank you for watching. Look forward to the comments and I'll see you in the next video where I'll tell you exactly how I see investing in this market, how one should approach investing in this market.