Thomas J. Gordon

Distressing Details of the UltraShorts

Do people think there is a psychological component to these ultra shorts or are they only priced according to the value of the assets they hold? srs is an etf. It sits on the market and people can trade it. Those days in november when it went over 200 there were lots of people who thought the reits were done for and that they'd never borrow another dollar in the credit markets. Is that why it went over 200 and quickly fell back?

Distressing Details of the UltraShorts

I sold my long reits and bought srs in april 2007. I was happy with it until about mid december 2008. When it went over 200 I felt very intelligent. Then it fell apart. I actually suspected it might fall apart but I couldn't get anyone to explain to me how Proshares was accomplishing the double short. Somebody said Proshares does swaps but I don't understand swaps that well and I don't see how they could use them to be short. I see all these people say "Ultra Short vehicles only try to get their results day by day". I don't know what that means. No one would buy srs or sks if it was only good for a day. As James Grant said in a recent newsletter about Proshares Ultra Short "Don't forget to sell".