Cramer’s Outrage: ETFs of Mass Destruction

Tuesday, 7 Apr 2009 | 7:42 PM ET

If there’s one thing in the market Cramer can’t stand, it’s Ultrashort ETFs. And the worst of the bunch is the SKF, the Ultrashort Financials Proshares , which Cramer calls “an ETF of mass destruction.” Instruments like the SKF allow you to short a basket of stocks in one fell swoop, and Cramer argues that the SKF in particular is just a tool for day traders and market manipulators who want to put pressure on the banks.

Cramer's Outrage of the Day
Cramer lashes out against Ultrashort ETFs.

"There’s something fundamentally wrong with aggressively shorting a passive basket of stocks” he says, and points out you’d be better off shorting the worst individual companies instead of a basket containing both the good and the bad.

For instance, the SKF’s largest holding is JPMorgan – the bank which Cramer pointed out was best of class only yesterday – is just an example of how these ETFs can be overweight stocks you wouldn’t necessarily want to short.

It’s the outrage of the day, and although much damage has been done, one thing Cramer like to see is the SEC step in and ban these market-manipulating ETFs.

Check out the videoto see Cramer’s outrage in its full form.

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