Comments on Fund My Mutual Fund: ProShares Ultra and UltraShorts Declare Contributi...

There is nothing wrong with the ETFs, but plenty o...

2009-02-12T22:23:00.000-05:00

There is nothing wrong with the ETFs, but plenty of things wrong with people who can't read a prospectus and understand the PURPOSE of these funds. They leveraged shorts are not mutual funds.

Cramer and the article writer are wrong. These leveraged short funds are not for buying and going to Tahiti and coming back to see profits. they are for DAILY performance. I traded SKF several times in the past 12 months for very impressive gains. I never held it longer than one night AT MOST. They are not for holding.

It says right on the page for SKF: DAILY PERFORMANCE.

also, forgot to mention. The single shorts work t...

2008-12-24T10:58:00.000-05:00

also, forgot to mention. The single shorts work the same way, still negative gamma, just less of it.

Its pretty simple, they all have negative gamma. ...

2008-12-24T10:57:00.000-05:00

Its pretty simple, they all have negative gamma. You are shortest at the bottom and longest at the top.

I disagree with the argument that they should be buy and hold instruments. That is what shorting stocks are for. The instruments provide excellen hedging vehicles because the negative gamma gives a long short portfolio a bit of a momentum tilt.

I just think it's a misconception that these are not doing their job (not that you have this misconception). The daily reruns are actually quite reliably close to their targets, it's just a leverage problem that the average investor does not understand. If you want to double short an index without gamma, short the double longs.

Thanks for this reminder about the problems with ...

2008-12-24T09:48:00.000-05:00

Thanks for this reminder about the problems with these Proshares funds. I had been thinking of buying TBT - the Ultrashort long bond fund, since treasuries shouldn't have the volatility of real estate or financials TBT seems like an especially useless way to play this theme. Better to just short TLT, or to play a dollar devaluation theme via bonds denominated in stronger currencies or the foreign currencies themselves.

yup, horrible to hold longer term. unfortunate re...

2008-12-24T01:10:00.000-05:00

yup, horrible to hold longer term. unfortunate really. there are some non levered short etf's, SH for short s&p, but its still proshares so need to read the prospectus to make sure this one accurately tracks (don't know what a non-levered one wouldn't though).

I prefer ETN's like the DTO and DXO, which apparen...

2008-12-23T17:19:00.000-05:00

I prefer ETN's like the DTO and DXO, which apparently don't suffer from the time decay associated with options. Juxtapose these two investments with proshares' DIG and DUG and it is clear that ETN's are superior.