Kill These ETFs, Now

It’s been awhile since we've cast a quizzically-raised ’brow in the direction of the ETF market’s unintentional comedy duo, the MacroShares Up (UCR) and Down (DCR) crude oil ETFs. A product of the genius of Yale University professor Robert Shiller—better known in these joyous times as the Shiller in the S&P Case-Shiller housing indexes—the crude oil ETFs have been dysfunctional since day one, Nov. 30, 2006.

They have now abandoned their meds entirely and are trading psychotically.

At the close Wednesday, UCR carried an 18.6 percent discount to its NAV. Bad enough.

But DCR closed at $14.25, or an 80.15 (not a typo) percent premium. Certifiable knuckleheads bought 60,500 of these gobblers, at prices between $13.60 and $14.30 Wednesday. To put that stupidity into some sort of context, it’s the functional equivalent of paying over $1300 a share for Google (GOOG) (assuming, of course, you accept GOOG’s share price as an NAV, which it’s not, but you know what I mean).

The MacroShares are irretrievably broken. They have never performed as advertised. They show no signs of ever working as advertised. They are a disgrace to the ETF market, and have been, pretty much since they were introduced.

Nice try. Didn’t work. Now kill them. They’ll make fine additions to your Thanksgiving table.

Comments

[manohmanoh:]

yes, but if mr. newton weren't paid by the article, he'd know it wasn't trading at a premium and in fact trades within 2% (on average) of the underlying asset.

speaking of knuckleheads..

2007 Dec 05 04:01 AM