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Jim (cont'd):  

As if this company has not done enough damage to the capital market with its double dose of fire…now it wants triple infallating fire… that is right ProShares is asking the SEC, the Securities and Exchange Commission, to approve 94 new short ETF’s… not with double leverage… but with triple leverage… Madam Commissioner Shapiro, you must stop these outrageous instruments… you just must… we are begging for you to put an end to this madness… for the record, Eric Oldberg who writes for RealMoney.com, the subscription version of TheStreet.com, where I am chairman, and who used to toil in the derivative vineyards of Goldman Sachs, for 17 years, and retired as a managing director, has already showed us repeatedly that there is no place for these ETF’s in this market… he has done most of the theory and the practice about them.

Most people think that these double or triple short ETF’s are a great way to bet against the sector no matter what your time frame… they think that they are a terrific way to hedge your exposure to a given sector for as long as you need to be hedged… with some of them actually using them to hedge against long term positions of companies that they work for… including banks, we have had callers saying that… that is not how they work… they do not work at all… because ETF’s are rebalanced every day their longer term performance is more a product of volatility than anything else… that is how the SKF, for example, can make you no money in a period where the financials that it is supposed to be shorting with a lot of leverage, got hammered.

Another company, Direction, already markets these triple short funds… and its funds have had the exact same problem… why introduce more of them… I think the only people who should ever buy these products are day traders… and what do they do for day traders… well, this is really what is so bad… they provide a very vital service… they give traders the ability to bang an entire sector down quickly… they are great for bear raiders… and they allow them to evade the margin rules that are set by the Fed… I think the SEC should get rid of all of these things… but at the very least it should refuse to approve these new triple x ETF’s… yeah, that is what it is called triple x… doesn’t triple x usually stand for no socially redeeming value… just cheap thrills.

There are so many problems with these products… if the double levered ETF’s are ways of letting traders get around the margin rules… than triple ETF’s make a complete mockery of them… and those rules were put in to create less volatility and shake out less people, make our markets more honest… we know from Eric Oldberg’s great work in TheStreet.com’s Real Money, and I urge you to look at it if you think that I am just making this stuff up… that over the long run these products appear to be destined to fail for any investor looking to profit from them… but over the short run, what they do, they exasperate swings and they make it very easy for bears to influence if not crush the market… that alone should be enough reason to ban them… they make it far too easy to sow fear and scare real investors out of the market… why should that be an imperative of our nation.

And when you make the stock market too dangerous for regular investors like you… you wreck the entire process of capital formation in this country… is that an imperative of our government… what is the point of having a stock market if double and triple ETF’s make it too dangerous for almost everyone to invest… these ETF’s, like carthage, must be destroyed… and the field sowed with salt, preferably kosher… so they never come back… if we do not get rid of them… they will get rid of us… if the SEC decides to reintroduce the Uptick Rule, my other big regulatory crusade… they are talking about watering that down too… so captured by the interest… and they do not factor in these funds, these ETF’s, the double and triple… then the rule will almost be worthless… anyone who wants to get around the Uptick Rule would use these funds to bypass it… just like they already use them to avoid the margin rules.

Here is the bottom line….

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The Bottom Line!:     ...and I am furious about this… not Melissa Rivers furious, but furious… if the SEC approves these triple X short ETF’s, then it might as well just forget about reforming the markets from the short selling bandits that helped wreck it for regular investors… because letting these things exist let traders the ability to violate the rules with impunity… Mad Money cannot come back and try to make you money as long as these double and triple ETF’s are around. I believe the SEC should ban all leveraged ETFs to help level the playing field