The article makes a good case for buying stocks directly rather than indirectly (lower tax bill on gains). There is yet another advantage to buying stocks directly: you avoid paying management fees to mutual fund companies.

There is a significant drawback not mentioned in the article. Poor people like us can not buy a fully diversified portfolio. If you have millions, buying all 500 of the S&P 500 is possible. If you have $1,000 it is not.

Another thought comes to mind: what are the taxation rules on an ETF? Here’s an extra credit assignment for you: prepare a table that compares the taxes on realized gains, unrealized gains, and dividends for mutual fund shares, individual stock shares, and ETF shares. One page and please cite your sources (website, irs code, textbook, previous article, etc.).

http://www.reuters.com/article/2012/09/26/column-personalfinance-idUSL1E8KP4YL20120926