He's definitely right in suggesting that investor disclosures don't go far
enough in warning potential buyers what they're getting themselves into - this
is especially true of any ultra fund (long or short), which could do some
serious damage to your portfolio if left unchecked for any long period of time.

That said, more and more ETFs are emerging as tools for investors to use to
hedge from or gain exposure to an area where they previously couldn't. They're
emerging less as a long term investment as a means to achieve an investment
strategy. In the long term, I think that's a very good thing.

Disclosure: The Rhino Stock Report just
picked up SDS today to hedge against market risk.

Note--I am not saying these are premeditated scams. But I think the risk
disclosure is entirely inadequate.

Now, the counterarguments I hear most often for the usage of these run along the
following:

1) these allow me to short in accounts that I otherwise could not, such as an
IRA (which is kind of like saying I do not wish to ban antihistamines because
now I can’t mask steroids…),
2) you need to know how to trade them—they are for day trades only (if
everyone went home flat at the end of the day, the fund company would have no
assets under management…so the subtext to that argument is that you are hoping
for a greater fool to hang on to these—this isn’t the price of wheat or the
price of Citi; the product has fatal flaws, so this argument is basically
saying you want to benefit not from your investment acumen, but by foisting a
flawed product on others)
3) these are better than options (I seriously question that—with these, if the
market round trips, it seems like you are worse off, so we need to weigh that
against the theta of an option for the same period…so it also begs comparison
with reaction to vol—an option increases in value as implied vol goes up,
whereas these rapidly get killed with realized vol (just look at how SRS or FXP
performed last year), furthermore, options have defined expiry--these are
undefined, on the surface they look like infinite expiry, but these also have a
knock-out extinguishing feature…these are pretty complicated questions to
answer, so I wonder if the subtext is that these are easier to use than options
because they do not require margin--if that is the case, then let's just admit
it) Puts and Calls are not easily replicated in the cash markets and they most
definitely have a rightful place within the market structure. These levered
ETFs, however, are easily replicated, and replicated more efficaciously, so this
is a specious argument that these are better than options…unless of course the
argument is that these do not require margin...

well im not sure Oberg--whoever that is--is breaking some news here.

the double inverse funds are in part (though not exactly) a scam on the
investing public. people were told they could now have short exposure in their
IRA's etc. (and i would sure hate to be one of them)

theyre great daytrading vehicles, absolutely love them for trading. but theyre
based off swaps, derivatives and god knows what else. there has clearly been no
guideline for how they trade relative to their underlying but im very convinced
theyre tied closely to the $VIX. which makes them more like an option than a
stock.

perhaps the only irony is that the ultra long ETF's **do** follow the
underlying. making it even more questionable how their ultra shorts work.

These are 1 day intraday trades. It seems to me the article puts the smart $
(yea right) as holding these vehicles for a while. Well you can't do that in
these Ultras.