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ProShares Announcement
Friday September 19, 11:25 am ET
BETHESDA, Md.–(BUSINESS WIRE)–Due to the emergency action announced by the Securities and Exchange Commission on September 18, 2008, temporarily prohibiting short sales of shares of certain financial companies, Short Financials ProShares (SEF) and UltraShort Financials ProShares (SKF) are not expected to accept orders from Authorized Participants to create shares until further notice. Unless notified otherwise, shares will be available for redemption by Authorized Participants as normal. The shares of these ProShares are expected to trade in the financial markets today, but may trade at prices that are not in line with their intraday indicative values.
No more SKF for me, ever. I’m on an accelerated schedule to get out of the rest of my short ETFs. Too many wild cards, not enough disclosure.
Long-term puts only from now on. I had hoped to hold onto the ETFs until we started to really plunge, because I had figured market functions would hold up that long, but we are apparently on an express train to Animal Farm.
I wonder how many others feel the same? I bet this week’s shenanigans are going to put a lot of people off the markets entirely. All they have done is burn a few shorts and set the markets up for a rapid retracement of the last 900 Dow points, plus give or take a couple thousand to the downside.
Markets don’t drop because of shorts (though shorts can drive them up fast). Markets drop with the scales off of longs’ eyes.
Bjorn
September 19th, 2008 at 12:19 pm
I almost jumped into SKF yesterday after the end of day rally, but I thought I’d better wait and see what was going to happen next. Glad I did.
I am very nervous now about the “market” and the counter-party risks that you highlighted recently.
It all makes me think of gold, but I have held off from that in anticipation of further declines in metals. In addition, the potential for restriction on buying & selling gold has always been a concern, and now it seems even more probable. Such an action could really hit hard if one was heavily positioned in physical gold and could not trade it. THis is the one issue that many gold advocates prefer not to think about. I can’t help but think about it.
Mike
September 19th, 2008 at 12:49 pm
Yes, we have to plan for that last contingency. I have simply assumed that it will happen at some point. Gold could be contraband. And although I think it may fall more in the near term, the greater risk is in not owning any.
Bjorn
September 19th, 2008 at 1:56 pm
How does one plan for a gold ban that would oulaw buying and selling gold? The last ban lasted many years. In such a case, it seems that not owning gold would then be a good thing. Unless, of course , you held your gold outside of the United States where it could still be traded.
Is the only safe option to hold gold outside of the United States? If so, how? Perth Mint? A vault in Switzerland?
Mike
September 19th, 2008 at 2:21 pm
I trust the Swiss over the Aussies, no comparison. The government and social climate down under greatly resembles that of the US, Canada and the UK.
It still makes sense to have some small amount on hand if you live in the states, but by no means a large hoard.
Mike
September 19th, 2008 at 2:35 pm
I should note that there is no reason not to visit Zurich. It is among the world’s most beautiful cities, and your business there is still perfectly legal as long as you report it to the beancounters (and databases) in DC, and this you must do if you have a healthy fear of the Spanish Inquisition.