Thoughts
The problem with the Nortel ETF was that 1 person buying the stock forced the value of the stock up, which forced the ETFs to buy more of
the stock which forced the value up. Not in an infinite loop or anything, but it meant that the value essentially was leveraged. ETFs look low-risk, they don't look like they're taking leveraged positions, but they are increasing the leverage of the system by not taking a position. An ETF is like a weight pulling down on both sides of a see-saw. I don't know if you've ever done this: I'm imagining hanging from a bar which is fixed by a rope only in the middle. If you keep yourself balanced it's fine, but as soon as you let go of one side the other side shoots up. An ETF is a little like a weight which is attached to both sides of the bar. If that weight is free to slide (your hands are not free to slide when you're gripping a bar), than you better have a lot of other weight otherwise it's an unstable equilibrium. You can't have everyone invested in the S&P 500.