Backstage Wall Street by Joshua M. Brown

Author:Joshua M. Brown
Language: eng
Format: epub, pdf
Publisher: McGraw-Hill Education
Published: 2012-09-22T04:00:00+00:00

14

A Pill for Every Ill

“Hello?”

“Hi, is this Joshua M. Brown?”

“Yes, this is Josh. Who’s this?”

“Josh, my name is Keith,* and I work in the sales and marketing department for ProShares. I’m calling because of a few articles you’ve written about some of our products.”

“I don’t write articles, Keith. I’m a blogger, and I write blog posts. But do go on.”

“Fine, blog posts. Look, we don’t think you’re being fair when you say that our inverse ETFs are ‘poisonous’ and that the ProShares UltraShort Financials ETF is ‘for crack-heads only.’ You can’t call our SKF fund a crackhead, Josh.”

“I hear ya, but SKF is a crackhead fund. It was built for crackheads and is traded primarily by crackheads. Dude, you built a leveraged fund that gives people two times the exposure of the bank stocks’ downside, and you released it during the worst banking crisis in modern history. Keep it real, partner. Just own it.”

“Well, I also think there’s a lot of misinformation being spread on the Internet about how our leveraged ETFs work or don’t work. On an intraday basis there is very little tracking error. The negative compounding that all you bloggers are complaining about really only happens over longer periods of time,”

“OK, Keith, so what you’re saying is that your leveraged funds are really only suitable for people who want a volatile trade with double the intraday move of the index itself, right?”

“Well, yes, Josh, they do work more efficiently for intraday trades and shorter holding periods, that’s correct.”

“Great, so we agree. Your leveraged ETFs are for crackheads. The record-breaking volatility we’re already coping with right now just isn’t enough for them, they need SKF and QID and such for an even higher high … like crackheads. So I’m gonna write whatever I want, Keith. Anything else I can do for you?”

(Click)

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