Now, we have got a new batch of ETF’s that don’t do what they think they do… I have to tell you, people are using these things, and they have no correlation to what you think they do… these are the ETF’s that track oil… you would think that they would pretty much mimic the returns that you would get by buying crude… just an easier way to buy the commodity… but in fact that is not how it works at all… these funds have consistently underperformed compared to oil… which they are supposed to track.. I want you to banish their use pronto rooney-mcfaddie… as of now the crude oil ETF’s, and in particularly the most widely traded of the bunch. the United States oil fund which gives a name to the United States Oil ETF (USO)… are being put right now on the sell block… and I want you to put them in solitary… and lock the door… and throw away the key… and maybe give them a little cruel and unusual punishment while we are at it… because I never much liked the 8th Amendment, or the rest of the Bill of Rights either… save for the 2nd Amendment, which makes me a bonifide American...

What is wrong with the USO… in a great article written by Kevin Baker at TheStreet.com, where I am chairman… Baker pointed out how this fund and the other ETF”s significantly underperformed the price of crude… between April 10th, 2006 when the USO was created and July 11th when oil peaked… the USO underperformed spot prices by 73% to 111%… since the USO’s inception crude is down 23%.. you would expect the ETF to be down about the same amount right… but it is actually down 54%… this year oil is 18% and the USO is down 6%… this has nothing to do with oil at all… it is a travesty of a fallacy of a joke, not even wrapped up in an enigma or a riddle… look at this, these have nothing to do… crude oil way up… let’s recap, when oil was going higher in a big multi year run, you did much worse owning the USO to capture the upside than if you just owned the crude… I mean it would be better if you like went to a gas station and just filled up your garage with the stuff.

When it was going lower you lost more money in the USO than if you owned crude… and now that oil prices are recovering again the USO is losing you money… doesn’t sound like an ETF that you should own does it… the funds company that it creates to sell these ETF’s make tons of money from you… but they are not making money for you… this is such a travesty… how did this happen… so how the heck is it that an ETF that is supposed to track oil has managed to so dramatically underperform the commodity… it is all about how the ETF works… the USO is designed to track the price of West Texas intermediate light sweet crude… but it is not a direct play on oil at all… it doesn’t own the oil, it doesn’t buy oil… it tracks light sweet crude by buying listed crude oil futures contracts… and similar derivatives… the problem is that these future contracts have a limited shelf live… not like oil, they expire… making it impossible for the USO to remain indefinitely invested… every month it has to roll its contract forward… so once a month over a period of 4 days the USO sells its expiring contracts and buys new ones for the following month… and that is where all of the underperformance comes from

In periods where the oil futures market is called contango, that is Wall Street jibberish meaning that the price of a commodity for futures delivery is more expensive than the spot market, or current market… when futures costs more than oil that is selling right now… then the USO is buying futures contracts that are more expensive than the ones that it is selling… month after month… that cuts heavily into its performance… that is the problem… and it is why the USO belongs in the sell block right now… the people running this ETF aren’t doing anything wrong… they warn investors about this in their prospectus… but I bet most of the people buying this aren’t reading the prospectus… in this case, I am doing the homework for you… the government will not help you protect your money… Mad Money will… the government won’t.

There is a silver lining here though… the oil futures market is now in contango … but when future oil prices become lower than the spot price… we say when a futures market is in backwardation… the opposite of contango… then the USO should outperform oil… because it will be buying cheaper contracts and selling pricier ones.. when that happens, I will gladly do a prisoner furlough… but, for now, the USO stays in the sell block…

One convict goes in, four more come out…

I put the casinos, Las Vegas Sands (LVS), Wynn Resorts (WYNN), and MGM Mirage (MGM) back on January 17th, 2008... since then Las Vegas Sands is down 94%, Wynn down 72%, and MGM down 95%… I also thought that you should sell International Game Technology (IGT), which makes gaming equipment… a month later I did that February 14th, 2008, it is now down 78%… now these stocks are starting to get a little kick… MGM Mirage may get funding for its city center project in Vegas… Las Vegas Sands going to restart construction McCale…which it had to shut down because it didn’t have the money.

Now that the credit markets are starting to unfreeze and a depression has been taken off of the table… I am much less worried about the casinos being crushed under the weight of their enormous debts… I don’t want you to buy them… I just want to declare victory.

Here is the bottom line…