Learned Helplessness

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I've been MIA from comments for nearly a week, since I'm busy with so many other matters, but I happened to see this morning a mention on Slope (from which I derive pretty much all my worldly information) that ProShares was getting sued over its SRS fund. A portion from the press release states:

ProShares sells its Ultra and UltraShort ETFs as "simple" directional
plays. As marketed by ProShares, Ultra ETFs are designed to go up when
markets go up; UltraShort ETFs are designed to go up when markets go
down. The SRS Fund is one of ProShares' UltraShort ETFs. The SRS Fund
seeks investment results that correspond to twice the inverse (-200%)
daily performance of the Dow Jones U.S. Real Estate Index ("DJREI"),
which measures the performance of the real estate sector of the U.S.
equity market. Accordingly, the SRS Fund is supposed to deliver double
the inverse return of the DJREI, which fell approximately 39.2 percent
from January 2, 2008 through December 17, 2008, ostensibly creating a
profit for investors who anticipated a decline in the U.S. real estate
market. In other words, the SRS Fund should have appreciated by 78.4
percent during this period. However, the SRS Fund actually fell
approximately 48.2 percent during this period — the antithesis of a
directional play.

This is just pathetic. I mean, I'm no raging fan of SRS – – "the widow-maker" – – since I've lost money just about every time I've touched it. But, even so, I have an intuitive sense that when you are dealing with an "ultra" fund of any kind, you either have to use it as a day-trading vehicle, or you sure as hell better know that the underlying assets are going to steadily trend in one direction or another in order to make money.

Because, look, if you give me a wad of money, and I put it into an asset class which goes down 1%, up 1%, down 1%, up 1%, and so on, ad infinitum – – and I am doubling the impact of those moves – – you are going to lose money! I'm no math wizard, people – I was the first person in my high school to ever score a "1" on the Calculus AP exam – but even a math numbskull like me can understand this.

So for these attorneys to be piously stating that SRS is the "antithesis of a directional play" implies an ignorance of simple arithmetic which I find breathtaking.