Ultrashort Emerging Markets Should Come with a Warning Label

Oct.30.08 | About: ProShares UltraShort (EEV)

Ultrashort Emerging Markets (NYSEARCA:EEV) should have a warning label on it; we were "fortunate" to have a 0.1% stake in it Wednesday but going back toWednesday 's discussion about how asset allocation is everything - just having this hedge on Wednesday alone can cost you nearly 40%. I routinely carry this as a 3-4% stake. You can see it's doubled earlier this month in under 2 weeks, than in the past few sessions nearly been halved. Yowsers.

I'm spending a lot more time with these ETFs rather than individual companies since everything is so random on an individual company basis; and as I look what to rebuy to begin rehedging, I was shocked to see the price back in the $110s (or $100s) when I saw it Monday in the $170s.

p.s. maybe we'll call this the Volkswagen bottom. It has been so unrelenting easy to be a short for so long - for once something blew up in their face on a massive scale. Too soon to tell.

Disclosure: Long Ultrashort Emerging Markets in fund; no personal position