Jonathan Liss

Cramer's Mad Money - Cramer Downgrades Analysts (12/22/08)

Excellent summary as usual Miriam - keep up the great work!

In terms of Cramer's point on UltraShort ETFs, I feel he is missing an essential piece of the puzzle. His YTD figures are alarming, but they miss the point that Direxion's Marketing Director, Andy O'Rourke, made to me recently, discussing his company's new 3x leveraged ETFs (long and short).

According to Andy, "The notion of '[2X or] 3X returns' is a misnomer. Leveraged ETFs are only supposed to provide accurate tracking on a daily basis. Longer term, the funds tend to overshoot or undershoot their stated goals so investors need to consider taking excess funds off the table, or adding in funds as needed to maintain their overall target allocations."

Viewed in this light, leveraged short funds allow individual investors the ability to protect their portfolios using relatively small cash allocations, over short amounts of time. (See more from Andy in my recent piece here: seekingalpha.com/artic....)

Cramer used shorting as a routine tool when he was a hedge fund guy. Now that he can no longer short stocks due to contractual obligations to CNBC, he seems to have come out in full force against shorting, and especially leveraged shorting. Seems unfair that his Wall St. buddies should be able to continue manipulating markets but when avg. Joe retail investor wants in on the same tools, he tries to shoot them down. This products represent the further democratization of Wall St. onto Main St. imho - far be it from Cramer or anyone else to try and stop that.