Why The Motley Fool needs to do something about 3x ETF's on CAPS
I've argued before that shorting pairs of 3x leveraged ETF's is not free money, as some have thought. However, red thumbing them on CAPS is free points, and better yet, free accuracy (yay! I'm 90% accurate!). Without facing a margin call, the CAPSter can wait out any prolonged unidirectional move on one side of one or two pairs while the other side makes him "accurate" over and over again and the other pairs make him very accurate, and the points will, on balance, probably work out okay for him too, especially since closing picks and reopening them puts compounding to work for you on red thumbs in CAPS.
All this makes some players appear to be much better investors than they really are. I confess I used to do this, until I realized that the accuracy of CAPS rankings, and more still, the subsequent stock ratings, are far more important to me than any benefit I get from accuracy juicing. So I am no longer part of the problem, but unlike TMFJake and TMFCHarris, I have no idea where to begin to become part of the solution.
Please, let's figure out a good way to eliminate 3x leveraged ETF shorting from player rankings, and make CAPS a better tool for us all.