WHITEBADGER

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

BOOYAH, cramer should look at the dismal performance of the 3x ultra short ETF's. Like BGZ, TZA, ERY, FAZ.
THEY ARE PITIFULL AND A BIG MONEY TRAP.

CARL WOJO


On Dec 23 08:48 AM SA Editor Jonathan Liss wrote:

> 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.