Total ETF value decreased after underlying stock increased in price
According to your post, you bought seven shares of VBR at $119.28 each on August 23rd.  You paid €711,35.  Now, on August 25th, VBR is worth $120.83.  So you have  But you want to know what you have in EUR, not USD.  So if I ask Google how much $845.81 is in EUR, it says €708,89.  That's even lower than what you're seeing.   It looks like USD has fallen in value relative to EUR.  So while the stock price has increased in dollar terms, it has fallen in euro terms.  As a result, the value that you would get in euros if you sold the stock has fallen from the price that you paid.   Another way of thinking about this is that your price per share was €101,72 and is now €101,33.  That's actually a small drop.   When you buy and sell in a different currency that you don't actually want, you add the currency risk to your normal risk.  Maybe that's what you want to do.  Or maybe you would be better off sticking to euro-denominated investments.   Usually you'd do dollar-denominated investments if some of your spending was in dollars.  Then if the dollar goes up relative to the euro, your investment goes up with it.  So you can cash out and make your purchases in dollars without adding extra money.   If you make all your purchases in euros, I would normally recommend that you stick to euro-denominated investments.  The underlying asset might be in the US, but your fund could still be in Europe and list in euros.   That's not to say that you can't buy dollar-denominated investments with euros.  Clearly you can.  It's just that it adds currency risk to the other risks of the investment.  Unless you deliberately want to bet that USD will rise relative to EUR, you might not want to do that.   Note that USD may rise over the weekend and put you back in the black.  For that matter, even if USD continues to fall relative to the EUR, the security might rise more than that.  I have no opinion on the value of VBR.  I don't actually know what that is, as it doesn't matter for the points I was making.  I'm not saying to sell it immediately.  I'm saying that you might prefer euro-denominated investments when you buy in the future.  Again, unless you are taking this particular risk deliberately.
The stock will slowly gain that $1 during the year. Suppose we have the highly theoretical situation that a company's stock is worth exactly $10 right after it paid its dividend, its dividend is always $1 per stock, and the company and everything else is so stable that its value never changes. Then the stock value right before the next dividend is paid will be close to $11 -- after all, it's worth a certain $1 dividend the next day, plus the $10 stock. And in between, half a year after the dividend was paid, it will be in between, say $10.50, or actually slightly less than that (because people like to buy in late so they can make money some other way with the money first). But the point holds -- the price decrease on the day that dividend is paid had been building up the whole period before that decrease. So stock dividends do make you money. "Liquidity is highly correlated to efficiency primarily because if an asset's price is not sampled during the time of a trade, it's price is unknown therefore inefficient.  Past prices can be referenced, but they are not the price of the present.  Prices of substitutes are even worse. SPY is extremely efficient for an equity.  If permitted, it could easily trade with much lower ticks and still have potential for a locked market. Ideal exchange An ideal exchange has no public restrictions on trade.  This is not to say that private restrictions would need to be put in place for various reasons, but one would only do that if it were responsible for its own survival instead of being too big to fail. In this market, trades would be approximately continuous for the largest securities and almost always locked because of continuous exchange fee competition with ever dropping minimum ticks. A market that can provide continuous locked orders with infinite precision is perfectly efficient from the point of view of the investor because the value of one's holdings are always known. EMH In terms of the theory the Efficient Market Hypothesis this is irrelevant to the rational investor. The rational investor will invest in the market at large of a given asset class, only increasing risk as wealth increases thus moving to more volatile asset classes when the volatility can be absorbed by excess wealth. Here, liquidity is also helpful, the ""two heads are better than one"" way of thinking.  The more invested in an asset class, the lower the class's variance and vice versa.  Bonds, the least variant, dwarf equities which dwarf options, all in order of the least variance.  Believe it or not, there was a day when bonds were almost as risky as equities. For those concerned with EMH, liquidity is also believed to increase efficiency in some forms because liquidity is proportional to the number of individuals invested thus reducing the likelihood of an insufficient number of participants. External inefficiency In the case of ETFs that do not perfectly track their underlying index less costs at all times between index changes, this is because they are forbidden from directly trading in the market on their own behalf. If they were allowed and honest, the price would always be perfect and much more liquid than it otherwise should be since the combined frequency of all index members is much higher than any one alone. If one was dishonest, it would try to defraud with higher or lower numbers; however, if insider trading were permitted, both would fail due to the prisoner's dilemma that there is no honor among thieves.  Here, the market would detect the problem much sooner because the insiders would arbitrage the false price away.   Indirect internal efficiency Taking emerging market ETFs as an example, the markets that those are invested into are heavily restricted, so their ETF to underlying price inefficiencies are more pronounced even though the ETFs are actually working to make those underlying markets more efficient because a price for them altogether is known." We need to be careful what we are talking about here. Inflation on a economy-level scale at an expected rate will not change consumer habits because the price increase is manageable. You have to realize that prices are not increasing in isolation: wages will have to rise along too.  High inflation that is expected will increase consumption of durable goods, as people attempt to 'get rid of their money' before the price changes on them. A good example of this was post-WWI germany, where hyperinflation was so bad that offices began to pay their employees twice daily, so they could adjust their wages, and so that their employees could go out during lunch and after work to buy something with the money before the price changed on them. Unexpected inflation may cause a temporary dip in spending until wages adjust, however consumers still need to buy, so they will likely push for higher wages, leading to consumption to stay about level. There is another effect to inflation as well: People who have savings will have their savings eroded over time if the economy is inflationary. To preserve their wealth, they will invest it. In a deflationary environment, money will increase in value simply by being hoarded, so they will be less willing to invest it. Deflation also increases the cost of interest on a loan, while inflation decreases it. So the overall effect is for an increase in spending under inflation, and a decrease under deflation. The person you have quoted is quite wrong. Price increases in a particular sector will cause consumer spending to decrease but this is a bad example, as it is not inflation, but rather a supply/demand problem of a particular consumer good. They are applying a micro-economic model (price increases of a single good) to a macroeconomic problem (price increases in the entire economy) when price increases at a global scale have the opposite effects. A good theoretical test of this is: what would happen if everyone in the US suddenly had twice as much money? (Ignoring international trade, of course). The answer: prices will double, and nothing else will change. The reason is, people will have more money to spend, but will require more money for their services, so in the end it all cancels out. "Because ETFs, unlike most other pooled investments, can be easily shorted, it is possible for institutional investors to take an arbitrage position that is long the underlying securities and short the ETF.  The result is that in a well functioning market (where ETF prices are what they should be) these institutional investors would earn a risk-free profit equal to the fee amount. How much is this amount, though? ETFs exist in a very competitive market.  Not only do they compete with each other, but with index and mutual funds and with the possibility of constructing one's own portfolio of the underlying.  ETF investors are very cost-conscious. As a result, ETF fees just barely cover their costs.  Typically, ETF providers do not even do their own trading.  They issue new shares only in exchange for a bundle of the underlying securities, so they have almost no costs.  In order for an institutional investor to make money with the arbitrage you describe, they would need to be able to carry it out for less than the fees earned by the ETF.  Unlike the ETF provider, these investors face borrowing and other shorting costs and limitations. As a result it is not profitable for them to attempt this.  Note that even if they had no costs, their maximum upside would be a few basis points per year.  Lots of low-risk investments do better than that. I'd also like to address your question about what would happen if there was an ETF with exorbitant fees.  Two things about your suggested outcome are incorrect.   If short sellers bid the price down significantly, then the shares would be cheap relative to their stream of future dividends and investors would again buy them.  In a well-functioning market, you can't bid the price of something that clearly is backed by valuable underlying assets down to near zero, as you suggest in your question. Notice that there are limitations to short selling.  The more shares are short-sold, the more difficult it is to locate share to borrow for this purpose.  At first brokers start charging additional fees.  As borrowable shares become harder to find, they require that you obtain a ""locate,"" which takes time and costs money.  Finally they will not allow you to short at all.  Unlimited short selling is not possible. If there was an ETF that charged exorbitant fees, it would fail, but not because of short sellers.  There is an even easier arbitrage strategy: Investors would buy the shares of the ETF (which would be cheaper than the value of the underlying because of the fees) and trade them back to the ETF provider in exchange for shares of the underlying.  This would drain down the underlying asset pool until it was empty.   In fact, it is this mechanism (the ability to trade ETF shares for shares of the underlying and vice versa) that keeps ETF prices fair (within a small tolerance) relative to the underlying indices." "It would be useful to forget about the initial price that you invested - that loss happened, it's over and irreversible, it's a sunk cost; and anchoring on it would only cause you to make worse decisions. Getting ""back"" from a loss is done exactly the same as growing an investment that didn't have such a loss. You have x units of stock that's currently priced $46.5 - that is your blank slate; you need to decide wether you should hold that stock (i.e., if $46.5 is undervalued and likely to increase) or it's likely to fall further and you should sell it.   The decision you make should be exactly the same as if you'd bought it a bit earlier for $40." "When you hold units of the DLR/DLR.U (TSX) ETF, you are indirectly holding U.S. dollars cash or cash equivalents. The ETF can be thought of as a container. The container gives you the convenience of holding USD in, say, CAD-denominated accounts that don't normally provide for USD cash balances. The ETF price ($12.33 and $12.12, in your example) simply reflects the CAD price of those USD, and the change is because the currencies moved with respect to each other. And so, necessarily, given how the ETF is made up, when the value of the U.S. dollar declines vs. the Canadian dollar, it follows that the value of your units of DLR declines as quoted in Canadian dollar terms. Currencies move all the time. Similarly, if you held the same amount of value in U.S. dollars, directly, instead of using the ETF, you would still experience a loss when quoted in Canadian dollar terms. In other words, whether or not your U.S. dollars are tied up either in DLR/DLR.U or else sitting in a U.S. dollar cash balance in your brokerage account, there's not much of a difference: You ""lose"" Canadian dollar equivalent when the value of USD declines with respect to CAD. Selling, more quickly, your DLR.U units in a USD-denominated account to yield U.S. dollars that you then directly hold does not insulate you from the same currency risk. What it does is reduce your exposure to other cost/risk factors inherent with ETFs: liquidity, spreads, and fees. However, I doubt that any of those played a significant part in the change of value from $12.33 to $12.12 that you described." You bought 1 share of Google at $67.05 while it has a current trading price of $1204.11. Now, if you bought a widget for under $70 and it currently sells for over $1200 that is quite the increase, no? Be careful of what prices you enter into a portfolio tool as some people may be able to use options to have a strike price different than the current trading price by a sizable difference. Take the gain of $1122.06 on an initial cost of $82.05 for seeing where the 1367% is coming. User error on the portfolio will lead to misleading statistics I think as you meant to put in something else, right? Market Capitalization is the product of the current share price (the last time someone sold a share of the stock, how much?) times the number of outstanding shares of stock, summed up over all of the stock categories. Assuming the efficient market hypothesis and a liquid market, this gives the current total value of the companies' assets (both tangible and intangible). Both the EMH and perfect liquidity may not hold at all times. Beyond those theoretical problems, in practice, someone trying to buy or sell the company at that price is going to be in for a surprise; the fact that someone wants to sell that many stocks, or buy that many stocks, will move the price of the company stock.