Daryan

Cramer on Ultra-Short ETFs: Just Plain Wrong

I hate to be that guy, but over at realmoney.com they had a former alternative investment analyst or something of that nature at Goldman do a 3 part analysis of these 2x and 3x ETFs and it was pretty clear that they were having an effect on the market due to the mechanics of how the trades are executed, especially in this thin market. It isn't really the leveraged etf itself that causes the problems, moreso it is the hedging that must take place by the market makers in order to make the trades at all, multiply this hedging by 2 and 3X and you do get a measurable and quantifiable effect on the overall market. I will send the author the articles and perhaps he will post his thoughts on the conclusions at a later time.