It's Smart to Worry About ETFs

In the comic strip Calvin and Hobbes, Calvin asks his dad how engineers determine the weight limit on bridges. The dad answers that they do this by driving heavier and heavier trucks over the bridge until it breaks, then rebuild the bridge after discovering what it took to break it.

This isn’t how engineers actually figure out the safety specifications of bridges -- since they know a lot about how physics works, they can predict how much it would take to break a bridge without actually breaking it. But the same isn't true in the financial world. No one knows the basic laws that govern asset markets, so there’s a tendency to use new technologies until they fail, then start over. Calvin’s dad was effectively describing the process by which we test financial innovation.