February 20, 2007: Gloat (Converium and Sirius Bonds) and bloat (replication in ETF land)

I am a happy man today. Converium, the Swiss-based insurance company in a successful re-structuring mode is now in play as a takeover candidate after refusing quite a generous total offer from French insurer Scor. And the proposed merger between Sirius and XM bodes very well for the Sirius 9.62% Bond prospects, especially its 104 optional call feature. Both were prominent in my Speculative Portfolio, which is exactly what both investments are (were). Of course, nothing has closed yet, and there are several hurdles - especially for the satellite radio deal. This type of action is what one, ideally, should hope for on the speculative side of the ledger.

ProShares introduced another twelve ultra long or short ETFs. The ultra generally indicated a 200% leverage in either a short or long position based upon a stated index. That makes over fifty of these vehicles to choose from marketed by ProShares. Good grief! I love ETFs, and we all knew that many more ETFs parsing securities would come to the public, but how much in one basic area is enough? It will be interesting to see how many ETFs on the increasingly narrow fringe actually survive five years hence. www.proshares.com

I would be interested to learn how profits are made in ETF land. Fees are pretty low. Indexes are in place. Where is the money? Apparently there is lots to be harvested within ETFs, oe else why the rush to produce such narrowly focused and seemingly replicated funds?

Maybe the Elliot Wavers' can tell me why in the cycle ETFs are proliferating or why ETFs never occurred before.Perhaps the Fibonacci folks? A good astrologer? OK, any chartist.....