Replies to post #118891 on ajtj99's Market Pulse

[Initq]

IMHO Pro Shares
From what I garnered in the prospectus each fund is set up as it's own trust. The structure seems to allow a fund to fail or become insolvent while the company in our case Pro Shares survives. (The reverse may also be true the company fails but the trust survives.)
Structured derivatives are used and one of the many market risk assumed is Counter Party risk.
Another risk is Swaps. So (My WAG) their first source is Para mutual IE We are betting against each other QID counter QLD after that, futures and derivates anybodies guess. It would seem to me IMHO it is the kind of structure that when every runs to the same side of the boat the weight would have to be carried on the derivative side and in an extreme moment yes specifically counter party risk would be ever increasing and the weak point to failure. So my take is for most market environments this should be fine It's allows exposure to futures and option type returns without the specific risk for the ordinary guy.
However if I ever saw the market take a serious accelerating multi day dive 1929 style. I will refrain from greed (QID)and look toward the bottom, short equities and with cash in hand (OK a small speculative QID position). Because 1929 type correction a La 2008 derivative Style might just leave me correct but out of money. I will try and make some calls but they clearly insulate themselves from the retail investor.