IBD has an article about the growing popularity of exchange traded funds in general, and the QQQ in particular. These are great products because they allow individuals easy exposure to a basket of stocks. They are generally much cheaper than mutual funds too. I see no reason to buy an S&P 500 tracking mutual fund when you could just buy SPY. Another benefit of these products (SPY, DIA, and QQQ) is that they provide an easy way to short the market. You can even short them on a down-tick.
The increased use of these products may be problematic though. The oh-so-wise Art Cashin, director of floor operations at UBS PaineWebber, has been pointing out the extreme buying in these baskets (and other) of stocks during this month-long rally. His concern is that buyers (big institutions) are not doing research on individual companies. Instead they just want to participate in a quick move in the market. He would rather see buying in the actual underlying stocks of the baskets. I think his concern is well justified.
