http://finance.yahoo.com/news/UltraShort-ETF-Losses-Go-to-tsmp-14870710.html

Relevant snippets:

“In previous pieces I have noted how these levered short ETFs are implicitly short a path-dependent volatility position. . . The volatility in the relative performance, however, should show people that this is an entirely inefficacious “hedge” or term position vs. other alternatives”

“To be fair, the marketing material for these levered short-side ETFs says explicitly that these ETFs are only meant to track daily index movements. But every time I see that, I have to wonder why a fund company would create a fund meant for a one-day hold — in theory everyone should go home flat every night, and the manager would have no assets under management. So it seems as though there is an implicit “greater fool theory” in place here — by definition, the company is reliant on someone holding these positions overnight and bearing the volatility risk.”

“I wrote earlier that there are only three reasons I could think of why someone would buy these: 1) they were uninformed, 2) they were trying to skirt the margin rules, or 3) they were trying to engage in market manipulation. I still stand by all three of these statements.”

So in summary, the take on the levered ETF’s by a former Goldman Sachs trader and then Managing Director, are that they are “ineffective term positions”, “requiring a greater fool to hold overnight” typically purchased by the “uniformed or manipulators”.

Elsewhere Mohan noted a comment on Jesse’s blog that GS earnings success was due to their trading prowess this quarter. Mr. Oberg, a former Goldman Sachs trader reveals rather insightful analysis on the levered ETFs (and has been doing so since they arrived last fall). How often can you pick the mind of a successful trader and get their unvarnished opinion on trading strategies? Good traders will read the article and cogitate on the conclusions, and hopefully adapt their trading strategies to synthesize this information. Bad traders (those buying, holding, and averaging down on the levered ETFs) will ignore the information and will blame their losses on “market manipulators” rather than taking accountability for their own trades.

Now here is the crazy part! Unless the F’ers decay at a fractional rate of their present value, then I calculate that there is only 119 days left for these two ETFs…with volitility it would be less.